Unpopular opinion:
Stop charging hourly.
As you improve as a service provider, you should evolve away from charging hourly for your work.
A thread, with numbers and examples... 🧵
Stop charging hourly.
As you improve as a service provider, you should evolve away from charging hourly for your work.
A thread, with numbers and examples... 🧵
Like a resumé, charging hourly for your work makes you a commodity.
Even if you raise your rates, the client is mentally still buying your hours spent more than the value you added.
Let's look at an example...
Even if you raise your rates, the client is mentally still buying your hours spent more than the value you added.
Let's look at an example...
I do a lot of positioning and messaging work for brands.
A hypothetical scenario:
Imagine I get hired to come up with an improved hero section (headline + sub-head + CTAs) to improve the conversion rate of an e-commerce store that does $5M in monthly revenue...
A hypothetical scenario:
Imagine I get hired to come up with an improved hero section (headline + sub-head + CTAs) to improve the conversion rate of an e-commerce store that does $5M in monthly revenue...
Let's say, because of my training + experience, I go for an hour-long walk and the perfect new hero section pops into my head.
I voice-dictate it into my iPhone notes and quickly walk back.
I send it to the client and we test it out.
I voice-dictate it into my iPhone notes and quickly walk back.
I send it to the client and we test it out.
The new messaging works great and improves the overall conversion rate by 20%.
That 20% lift is worth $1M in revenue per month to the brand. ($5M * 20%)
That's $12M per year.
It took me an hour.
That 20% lift is worth $1M in revenue per month to the brand. ($5M * 20%)
That's $12M per year.
It took me an hour.
Of course, we can't charge $12M per hour.
We can't even charge $1M per hour.
And as a client, you certainly can't hire someone who charges $1M per hour.
Because that new messaging didn't take an hour.
It took a decade of studying humans, behavior, copy, and positioning.
We can't even charge $1M per hour.
And as a client, you certainly can't hire someone who charges $1M per hour.
Because that new messaging didn't take an hour.
It took a decade of studying humans, behavior, copy, and positioning.
This is a simplified and extreme example, but it's not unrealistic.
If you're an expert, and you charge hourly, your work and skills are being viewed as a commodity.
And you're likely not getting (enough) credit for the years you spent honing your craft.
If you're an expert, and you charge hourly, your work and skills are being viewed as a commodity.
And you're likely not getting (enough) credit for the years you spent honing your craft.
Alternative to hourly #1:
1. Project-based pricing: You set a price for the project.
A neutral ground between hourly and performance-based pay, this method works well when scope and requirements are clearly defined. You get valued more for your speed and experience.
1. Project-based pricing: You set a price for the project.
A neutral ground between hourly and performance-based pay, this method works well when scope and requirements are clearly defined. You get valued more for your speed and experience.
Alternative to hourly #2:
2. Value-based pricing: More difficult to negotiate and often harder to measure, but if it gets you closer to getting paid for the value you bring, it's worth it.
Tip: Combine base + incentives to make this work.
2. Value-based pricing: More difficult to negotiate and often harder to measure, but if it gets you closer to getting paid for the value you bring, it's worth it.
Tip: Combine base + incentives to make this work.
In the end, if you're really good, the absolute best thing you can say about your pricing is,
"It's expensive. But worth way more than it costs."
Fin.
"It's expensive. But worth way more than it costs."
Fin.
If you enjoy this thread, a RT of the original tweet would be amazing.
https://twitter.com/clayhebert/status/1473714878208778240
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