Key tax dates and deadlines for 2018/19
It is an inevitable reality that, for anyone earning a livin...
By Jonathan London on 15th July 2014
The very nature of freelancing often means that the ability to be flexible is a hugely important asset to have.
Whether you’re being flexible with regards to your working hours or the amount you decide to put away into your rainy day fund, operating as an independent professional can mean that you have to learn to adapt on a regular basis.
One area of freelancing that can be subject to change from contract to contract is estimating or quoting your price for a job.
The amount you give can depend on a number of factors; the difficulty of the task, the time it will take, whether or not you may need to take on a sub-contractor and so on.
Of course, this is an important part of being self-employed and knowing how to estimate or quote properly will help you negotiate contracts much more smoothly.
This requires you to be able to adapt to the needs of each client and the contract they are offering. But before you can do that you have to be aware of the distinctions between an estimate and a quote.
The differences are subtle, but if you don’t get it right at the beginning of a project your client may contend what they are paying you – and this can lead to a number of difficult outcomes which it’s best to avoid altogether.
An estimate is exactly what you might think by its name, an estimation of how much you think a job may cost.
This is by no means a guarantee and you should make this clear when discussing the pricing of the contract with the client. Usually, an estimate should be within a percentage range (for example, 20 per cent) of the final price, depending on whether anything changes during the project.
The price may increase if you have taken more time or effort to do a job. However, many clients will tend to ask for a definitive quote as they are more comfortable with knowing how much something will cost outright.
This is a concrete figure which you will agree with a client before starting a project. In order for this to work properly, you must specify the amount and type of work you are doing alongside the cost for doing so.
If the client then wants you to carry out further work, you can charge for more according to your initial contract agreement.
Itemise your time
By providing a client with an itemised account of how much time you intend to spend on each aspect of the project, your client can gain a better understanding of the service you are providing.
This also helps you to organise your time and allows you to plan out a project from the start.
Hourly rate vs total job sum
There are no definitive rules when it comes to how you should price a job. Each freelancer is different and so you are entitled to charge what you wish.
However, it’s can be useful to look at each method before you decide how you will price a job.
The main difference is that a quote or estimate provides the client with a concrete (in the case of a quote) or good idea (estimate) of what they will be paying for. With an hourly rate fee, they could end up paying more for the amount of time it takes you to complete your task. For this reason, many clients prefer a quote before hand, as they know where they stand.
Of course, you could also give an estimate in terms of hourly rate as well. For example, the job may take you X number of hours, for which you can give an estimate of X amount.
However, if you fail to deliver on time (and there have been no problems to justify such an issue) then a client may be reluctant to pay for the extra hours. So, while some contractors do work off an hourly rate, providing a solid quote up front could be the easiest way to do things to avoid any hassle later on.
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