Pricing is more than just a financial decision. It is a workflow decision.
Your billing model affects how you scope work, how clients behave, how your team plans their week, and how profitable your projects actually are.
Many times agencies, consultants, and freelancers choose a model based on what seems standard rather than what fits.
Let’s break down the different models, how to choose, when to switch, and how time tracking can be leveraged to improve pricing strategies.
What Your Billing Model Should Solve
Before deciding what’s best for you and your business, keep in mind these areas that pricing should solve:
- Predictable revenue for you
- Predictable costs for the client
- Clear expectations about scope
- A fair exchange of risk
- A process that supports good work, not constant renegotiation
Different models solve different problems. The best model is the one that matches your work type and your client’s expectations.
Retainer Billing
Retainers work well when the relationship is ongoing, the work is recurring, and the client wants consistency.
When retainers work best
- Long-term partnerships with steady workstreams
- Support that repeats each month (content, SEO, design, ops, strategy)
- Clients who value responsiveness and continuity
- Teams that can plan capacity week to week
Pros
- Predictable income and easier cash flow planning
- Less time spent selling and rescoping
- Better context retention, which improves quality over time
- Smoother planning for you and the client
Cons
- Scope creep can quietly destroy margins
- “Always on” expectations can grow if boundaries are unclear
- Underutilization is real (some months are lighter)
- Harder to connect pay to outcomes if deliverables are vague
Retainer success tip
A retainer should not be “unlimited.” It should have a defined container.
Examples of containers:
- A set number of hours per month
- A list of recurring deliverables
- A priority queue with clear turnaround expectations
- A defined scope plus add-on rates for overflow
Hourly Billing
Hourly billing works best when time is the product and scope varies.
It is also the easiest model to start with, which is why so many consultants default to it.
When hourly works best
- Variable work with changing priorities
- Advisory and support where effort is hard to predict
- Early-stage client relationships without a stable workflow yet
- Situations where the client wants maximum flexibility
Pros
- Simple and transparent
- Flexible for changing requests
- Lower risk for you on unclear scope
- Easier to bill for small, one-off tasks
Cons
- Unpredictable cost for clients
- Harder for clients to budget and approve work
- Incentives can feel misaligned (more time equals more revenue)
- You can “work a lot” and still not earn a lot if rates are not aligned
Hourly success tip
Hourly works best with guardrails:
- A weekly or monthly cap
- Pre-approval for going over a threshold
- A clear definition of billable vs non-billable time
- A weekly summary so clients understand what they are paying for
Project-Based Billing
Project-based billing works best when the scope is clear and the outcome is defined.
This model can be highly profitable, but only if you know your delivery process and manage scope tightly.
When project-based works best
- Clearly scoped deliverables (websites, audits, launches, redesigns)
- Fixed timelines and defined milestones
- Repeatable services that you have delivered before
- Clients who want clarity and a fixed cost
Pros
- Clear deliverables and clear expectations
- Predictable cost for the client
- Easier to sell value, not time
- Better opportunity for higher margins if delivery is efficient
Cons
- If scope is unclear, you absorb the risk
- Change requests can break the model without a process
- Requires stronger project management
- Estimation errors can destroy profitability
Project-based success tip
Your scope document is your profit protection.
Include:
- What is included and what is not
- Number of revision rounds
- Timeline assumptions
- What counts as a change request
- Your process for handling out of scope work
How to Choose the Best Model
Here is a simple decision framework. Ask these questions:
1) Is the work recurring or one-time?
- Recurring work usually fits a retainer.
- One-time deliverables usually fit project-based.
- Unpredictable ad hoc work often fits hourly (or a capped retainer).
2) How clear is the scope?
- Clear scope: project-based is strong.
- Unclear scope: hourly or a discovery phase first.
- Semi-clear scope with recurring needs: retainer with boundaries.
3) Who should carry the risk?
Every model assigns risk differently:
- Hourly places risk on the client (cost can grow).
- Project-based places risk on you (effort can grow).
- Retainers share risk (value depends on consistent use and boundaries).
Pick the model that assigns risk fairly for the work type.
4) How mature is the client?
- Mature clients often prefer retainers or fixed projects.
- Early-stage clients may need hourly flexibility while you define the system.
- Clients who frequently change direction need strong guardrails in any model.
5) How repeatable is your delivery process?
- Repeatable process: project-based can shine.
- Still figuring it out: hourly or a short retainer may be safer.
- Long-term operations support: retainer usually fits best.
How Time Tracking Helps You Pick the Most Profitable Model
Time tracking is not just for billing. It is one of the best inputs for pricing strategy.
When you track time consistently, you can answer questions like:
What is my real effective hourly rate?
Even if you bill project-based, you can calculate:
Effective hourly rate = Project fee ÷ Hours spent
If a $5,000 project took 50 hours, your effective rate is $100/hour.
If it took 80 hours, your effective rate is $62.50/hour.
That difference is usually not effort. It is scope, process, or estimation.
Which clients and services are actually profitable?
Time tracking can reveal patterns like:
- Certain deliverables always take longer than expected
- One client requires double the communication time
- Internal meetings are eating delivery hours
- Revision cycles are the true cost driver
This helps you adjust your pricing, your scope, or your process.
Are retainers being used the way you planned?
For retainers, time tracking can show:
- Underuse (you are reserving capacity you do not recover)
- Overuse (you are consistently delivering more than the agreement)
- Seasonality (some months require more support than others)
This is the data you need to reset expectations and right-size the retainer.
Are your project estimates improving?
If you compare estimated hours to actual hours, you can improve your forecasting over time.
That makes project-based pricing safer and more profitable.
Price with Confidence
Retainer, hourly, and project-based billing can all work. The right choice depends on your work type, your scope clarity, your client’s needs, and how you want to share risk.
If you want to choose with confidence, do not rely on gut feel. Use time tracking to see what your work truly costs, which services perform best, and when your model no longer fits.
Want to improve pricing strategies based on real profitability, not guesses? Start tracking time for a few weeks and compare your effective rates across clients and project types. Start Your Free Trial ➔