There are essentially two types of billing for contract
work: Fixed Bid or Time & Materials. Both have their
advantages and disadvantages. And you'd better know up-front
which one your client has in mind before you start talking
about money.
A Fixed Bid contract is just like it sounds. You bid that
you can do a defined set of work for a fixed amount of
money. If you are more efficient at doing the work, you make
more money per hour of work done.
If you are inefficient, or worse, overlooked something
about the project (or you allowed scope-creep), you can
spend a lot of time and end up bringing your effective rate
per hour way down, possibly even losing money on the project
if you really blow it.
A Time & Materials contract is similar to being an hourly
employee, at least in that you are paid a set rate for the
actual hours that you worked, and you may be reimbursed for
specific expenses such as hardware that you purchase for the
company.
You don't work, you don't get paid (see my notes about
unpaid holidays for more on this). If you are efficient, you
might make less money overall, but if scope-creep enters in,
you still get paid for all of your work.
(Scope-creep is when you allow the defined set of
boundaries for the work to be expanded. A telltale sign this
is happening is when you hear someone say, “As long as we're
doing that, let's...”.)
