Every project is either hourly or fixed price. The difference only matters when you invoice, but by then it is expensive to change.
Hourly projects
The client is billed for the hours worked, at the project's client bill rate. Invoices for the period are built automatically: hours are gathered, priced per day at whatever rate was in force, and totalled.
Choose hourly when the client has agreed a rate and pays for time.
Fixed-price projects
The client has agreed a price for the work, not a rate for the hours. A fixed-price project therefore has no client bill rate at all, and switching a project to fixed price clears it. No client invoice is generated automatically. Nothing is being withheld: there is no hourly figure to bill.
To bill a fixed-price project you create the invoice yourself and state the amount: the remaining fee, a percentage of the budget, a milestone, or a figure you type in. Those lines print a dash where hours and rate would be, because there is no hours-times-rate sum behind them.
Hours are still tracked, still appear on timesheets, and still feed the cost side of your finance reports. You just do not bill the client for them one by one.
Paying your team is the same either way
The project's pay per hour, the rate members earn working on it, applies to both types. A fixed-price project still produces payable invoices for the people who worked on it. You can be paid a fixed fee while your costs are still measured by the hour, and that is exactly what the Project Finance report shows you.
Choosing
- Client pays for time, rate agreed: hourly.
- Client pays an agreed price for a deliverable: fixed price.
- Retainer or internal work you never bill: fixed price with no invoices raised.
Changing type later
You can switch, but do it carefully. Moving to fixed price clears the client bill rate, and invoices already generated keep the amounts they were generated with. Cancel anything that no longer makes sense instead of leaving it to be paid.