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Mencius2026-09-24By Anderson#mencius#hourly or flat fee#freelance pricing#project pricing#confucianism#solo business owner

Hourly or Flat Fee? What Mencius Would Tell a Freelancer

且子食志乎？食功乎？ — So do you pay for the intention, or for the accomplished work? (《孟子·滕文公下》, literal translation)

Hourly or Flat Fee? What Mencius Would Tell a Freelancer

Neither one wins in general. The choice turns on a single variable: how completely the deliverable can be specified before work starts. Specify it tightly, charge a flat fee. Leave it vague, charge for time. Economists proved this for construction contracts decades ago, and Mencius argued the underlying point in the 4th century BCE.

Ask any freelance forum and you'll get both answers, confidently. A commenter on r/Upwork states the trap better than most pricing guides: "The problem with hourly jobs is that the more efficient you are at the work the less you will make... The problem with fixed priced work is that underestimating costs you money."

Key Takeaways

  • Hourly bills your presence; a flat fee bills a result. They are two different products, not two prices.
  • The deciding variable is design completeness, not confidence or seniority.
  • Renegotiating incomplete contracts cost 7.5–14% of the winning bid in a study of highway paving.
  • Mencius made Peng Geng admit nobody actually pays for effort — only for accomplished work.

Why does this argument never settle?

Because each camp is describing a real failure of the other model, and both are right. Hourly billing converts your skill growth into a pay cut: get 30% faster, invoice 30% less. A commenter on r/freelanceuk put it in six words — "otherwise you get punished for being good."

Flat fees have the mirror flaw. You quote once, at the moment of maximum ignorance, then absorb every surprise. A small-firm lawyer on r/LawFirm described the result plainly: "flat fee projects take a lot more time to complete than planned." He'd built a whole practice on flat fees and was moving part of it back to the clock.

So both sides win their own argument, because they're arguing about different risks: one camp fears losing the upside of skill, the other fears losing control of the downside. Nobody in these threads names the variable that decides which risk you're actually exposed to.

What actually decides it — confidence, or the deliverable?

The deliverable. Specifically, how completely it can be described before anyone starts working. This isn't a matter of nerve or experience; it's a property of the job in front of you.

That answer comes with thirty years of economics behind it. Patrick Bajari and Steven Tadelis modeled exactly this trade-off for construction procurement in "Incentives versus Transaction Costs: A Theory of Procurement Contracts" (RAND Journal of Economics, 2001). A fixed price gives the contractor every incentive to control costs, because savings are theirs to keep. But when the design is incomplete, the job gets renegotiated mid-flight, and renegotiation is expensive. Their result: as projects grow more complex, cost-plus arrangements — billing for what the work actually consumes — become the better contract, despite the weaker incentives.

Read that against the best answer in these Reddit threads, from r/freelanceuk: "If there's a tightly focused deliverable, price on the deliverable. If the deliverable will lack clarity until you're some way into the project, then price based on time." That freelancer independently reinvented the paper's conclusion. What the paper adds is the mechanism — and therefore the diagnostic you can run before quoting.

How expensive is guessing wrong?

Measurably expensive, and the bill lands in the price either way. Bajari, with Stephanie Houghton and Tadelis, later took the theory to data in "Bidding for Incomplete Contracts: An Empirical Analysis of Adaptation Costs" (American Economic Review, 2014). Studying highway paving contracts, they found that "adaptation costs account for 7.5–14 percent of the winning bid." Their comparison is the striking part: those adaptation costs dwarfed the markups from private information and market power that auction research usually focuses on.

Here's what that means for a quote. When you put a flat number on a job whose scope is still fuzzy, you are selling the client insurance against your own misestimation, and you have to price the premium. If you don't, you eat it. Contractors bidding on incomplete highway designs didn't absorb that risk out of goodwill — they bid it into the number. Flat-fee pricing isn't free money for being efficient. Part of it is payment for carrying uncertainty that hourly billing would have left with the client.

What would Mencius say about billing by the hour?

He'd ask what you think the client is buying. In 《孟子·滕文公下》, a student named Peng Geng challenges him: a scholar who produces nothing tangible shouldn't be fed. 「士無事而食，不可也。」 Mencius answers with the division of labor — 「子不通功易事，以羨補不足，則農有餘粟，女有餘布」 — if you don't exchange accomplished work and trade services, using surplus to cover shortfall, the farmer sits on extra grain and the weaver on extra cloth. Carpenters and wheelwrights eat because their work enters that exchange.

Peng Geng pushes back: carpenters and wheelwrights work in order to be fed — is that the scholar's motive too? Mencius's reply is the line that settles our question. 「子何以其志為哉？其有功於子，可食而食之矣。且子食志乎？食功乎？」 Why are you asking about their intention? If their work accomplished something for you, you pay them. So do you pay for intention, or for accomplished work?

Peng Geng says intention. Mencius traps him in one move: suppose a man smashes your roof tiles and scribbles on your fresh plaster, intending to earn his food — 「毀瓦畫墁，其志將以求食也，則子食之乎？」 Would you feed him? No, says Peng Geng. 「然則子非食志也，食功也。」 Then you aren't paying for intention. You're paying for accomplished work.

Doesn't that settle it in favor of flat fees?

Not quite — and the distinction matters. Mencius established what payment is for, not what it should be measured by. Those are separate questions, and collapsing them is the mistake behind most confident pricing advice.

Hourly billing is the one model that invoices the thing Mencius says nobody pays for: hours present, effort spent, 志 rather than 功. That's why it grates on the "punished for being good" camp, and why the plasterer smashing tiles is such an uncomfortable reductio — on a pure time sheet, he'd have a claim. But measurement is a practical problem. When the result can't be defined yet, hours are a proxy for accomplished work, an imperfect one you both accept because the alternative is a fictional number. Another lawyer on r/LawFirm drew the line by variance: "If I know that for X it typically takes 9-11 hours, I can charge a flat fee equivalent to 10 hours. If Y might take 10 hours for one client, and 100 hours for another, that's too much of a swing."

Nine-to-eleven hours is 功 you can name in advance. Ten-to-a-hundred isn't. Same practitioner, same skill, two different contracts — because the jobs differ, not because his confidence does.

Which model fits which job?

If the work is...ChargeWhy
A defined deliverable with narrow time varianceFlat feeThe 功 is nameable in advance; efficiency gains stay yours
Open-ended, exploratory, or client-dependentHourly or day rateHours are the honest proxy when the result can't be specified
Undefined now, definable after a diagnosisPaid scoping phase, then flat feeThe scope document is itself a deliverable you can price
Defined, but with a high-variance clientFlat fee plus named limitsRevisions and out-of-scope work priced separately, up front

That third row is the one most freelancers skip, and it's the closest thing to a real answer. A r/freelanceuk commenter described it as pricing "a scoping phase separately, with the output including the quote for the main deliverable." In Mencius's terms, that converts an unpriceable job into two accomplished things you can actually exchange — which is precisely his 通功易事 point, applied one level down.

How is this different from raising your prices?

It changes a different lever. This series has worked through the decisions a solo business faces one at a time; this one is the only entry that changes the unit you sell in rather than the amount.

The questionWhat it changes
Raising your pricesThe number
Scope creepWork delivered per project
Client concentrationWhere income comes from
Your first hireTotal capacity
Feast or famineWhen income arrives
Niching downWhat you sell, and to whom
The AI discountYour price, argued from your tools
Hourly or flat feeThe unit the price is quoted in

The practical consequence: switching units changes who carries the uncertainty, which is why it reshuffles your risk without necessarily raising your income. It also sits upstream of getting paid at all — an ambiguous unit is how a disputed invoice starts.

What do you actually do before the next quote?

Four moves, in order.

  1. Test whether you can name the 功. Write one sentence describing the finished thing, specific enough that both of you would agree it's done. If you can't write it, you don't have a flat-fee job yet — you have a scoping job.
  2. Estimate the range, not the number. If your honest low and high are within roughly 20% of each other, quote flat. If the high is several times the low, that variance is the product; bill time or split the work.
  3. Sell the diagnosis separately. A paid scoping phase turns "I don't know what this is yet" from a pricing risk into a small deliverable with its own fee — and gives you real information before the big number.
  4. Price the client, not just the job. Practitioners across these threads charge more for high-friction clients. That's not sharp practice; variance is a cost, and one source of it is how the other party behaves.

Where the analogy stops

Mencius wasn't designing contracts. The Peng Geng exchange is about whether a scholar deserves material support at all, in a world of patronage rather than markets — closer to defending public funding for research than to choosing a billing model. And he opens that very chapter with a constraint most pricing advice ignores: 「非其道，則一簞食不可受於人。」 If the way is wrong, you mustn't accept even a single basket of food. His first question about payment was whether it was legitimate, not how it was structured. He'd likely find optimizing the unit a small matter.

The 食功 standard also cuts toward you, not just for you. Charge a flat fee and you've been paid for a result — the hours you spent, the tools that made it fast, the nights you didn't sleep, none of those are what the client bought. Deliver the 功. That's the deal you proposed.

Two limits on the economics, stated plainly. Bajari and Tadelis studied construction and highway procurement, where designs are formal documents and renegotiation runs through change orders; a two-person design project is not a state paving contract, and the 7.5–14% figure is theirs, not a number to apply to your quote. And the trade-off they model assumes both parties can walk away and enforce terms — which is why, for freelancers, the contract question is inseparable from who you're contracting with.

Want to argue the point with him directly? Ask Mencius, or read his full profile first. He's also weighed in on whether you have to be ruthless to succeed and keeping your moral compass in a compromising job — the same instinct for asking whether the payment is right before asking how much it is.

FAQ

Should freelancers charge hourly or per project?

Per project when the deliverable can be specified tightly in advance, hourly when it can't. The deciding factor is design completeness, not seniority or confidence. Bajari and Tadelis's 2001 procurement model found fixed-price contracts superior for well-specified work and cost-based contracts better as complexity rises, because incomplete designs force costly renegotiation.

Why do I make less money billing hourly as I get better?

Because hourly billing prices your time rather than your result, so every efficiency gain shrinks your invoice. Mencius's distinction names it exactly: hourly bills 志 (effort and presence), while what clients actually buy is 功 (accomplished work). Move to fixed pricing only for jobs whose result you can define beforehand.

Is a flat fee riskier than charging by the hour?

It moves the risk to you. With a flat fee you absorb every misestimate, so the quote must include a premium for that uncertainty — effectively selling the client insurance. In highway paving contracts, Bajari, Houghton, and Tadelis found adaptation costs from renegotiating incomplete contracts came to 7.5–14% of the winning bid, larger than the markups auction research usually studies.

What is a paid scoping phase?

A small, separately priced piece of work that defines the main project: an audit, a technical spec, or a design brief delivered as its own deliverable with its own fee. It resolves the hourly-versus-flat-fee dilemma by converting an undefinable job into two definable ones, and gives you real information before quoting the larger number.

What does 食志乎？食功乎？ mean in Mencius?

Literally "do you feed intention, or feed accomplishment?" In 《孟子·滕文公下》, Mencius asks his student Peng Geng whether payment is owed for a worker's intention or their accomplished work. Peng Geng says intention, until Mencius asks whether he'd pay a man who smashed his roof tiles while intending to earn a meal. The answer establishes that payment tracks results.

Sources and a note on the text

On the text and the translation. The Chinese source for 《孟子·滕文公下》 is quoted from the Chinese Wikisource edition linked below, retrieved as raw wikitext and checked line by line against the passage as quoted here; ctext.org is not used, as it blocks automated retrieval. English renderings are my own and deliberately literal. D. C. Lau (Penguin, 1970), James Legge (1861) and Bryan Van Norden (2008) all render this passage differently, and Legge translates 食 as "support" where I have used "pay" to keep the commercial sense visible. Reddit quotations are reproduced as written, with their original spelling. Mencius's dates are conventional estimates.

Hourly or Flat Fee? What Mencius Would Tell a Freelancer · Hundred Masters