Design Fees: Flat Rate vs. Hourly?

I am bringing this question over from a designer's group I moderate.
Seems like it would be of interest to consumers as well as  designers.

Q.

I have recently read some marketing advice that said some clients would rather pay a flat set rate for a job than be billed hourly. I think it is very hard to calculate how much time you can spend on any one job because so many unknown things come up.

A.

I agree that clients think they would rather pay a flat rate. It just seems simpler than the unknown.

The problem with a flat rate is that you are going to end up charging most clients MORE than they would have paid hourly, while a few others will pay less. The only way to come up with an average (and thus a flat rate) is to go over your books for a number of years and average everything out.

Hardly anyone is really average, so you will come out OK (based on the past) but THEY will pay more or less, depending upon how much of your time they use. They will also tend to USE more of your time because they don't have to pay any more to get it. So you will have to take this into account and recalculate your flat rate every year...It WILL creep up because your clients have no incentive to economize.

I always tell my clients that the best way to pay me less is for them to be efficient. The more decisive they are, the quicker things go.

That's why contractors used to do the old "white or almond?" schtick. It kept things simple.
Too many choices can be overwhelming for some clients. Lots of clients, in fact. Trouble is: There are just more and more choices these days...and we ARE designers after all. We're all about choice!

I also think that the designer who presents questions requiring decisions to the client in a logical order, without too much at one time, can control the pace of the design project and keep the client from getting overwhelmed.

Thing is: We can never tell in the first interview who is going to be decisive and who is going to be a waffler who takes forever to make up her mind, and then changes it ten times.

Why should the decisive client have to pay for the contribution the waffler makes to the flat rate?

I continue to charge hourly, to be fair to everybody. I also give a range of estimated charges based upon my understanding of the scope of the project and my past experience.

What do YOU think?

Peggy