Still Billing by the Hour?
Transitioning from hourly billing to fixed pricing can be complicated, mostly because you are required to shift the way you think and your approach to be able to do so seamlessly (which is our measure of success in this case).
Are you trading time for money or are you selling outcomes/value? Hourly building creates several barriers for many clients and stifles collaboration and engagement efforts which ultimately prevent you from delivering your best outcomes and optimal value. Do I have your attention? Good, you’re in luck! Let's take a look at a few issues from your customers point of view.
Cash Machine… Who Me?: Unless you are commanding a small hourly investment ($20 - $50/hr), your client will begin to feel the grip of a steadily increasing tab with no real way to see the finish line. The lack of certainty and transparency results in missed opportunities as well as increased anxiety and stress for those who’ve come to you in many cases because they already have enough anxiety and stress to deal with and they’ve come to you for assistance (through your products and/or services). Takeaway: Are you looking out for your clients best interest or your bottom line? At some point, the answer to that question will run across you customers mind. Be on the right side of it. Your fee should be based on the perceived value to the client rather than the hours involved in the overall service delivery.
I’m Paying You Right? Your clients do not want to have to think about what you are doing with your time while you’re taking their money. They do not want to be left wondering nor do they want to. Now you’re stuck resolving disputes about hours and losing valuable hours of engagement if/when your client comes to you with questions about time, evolving estimates, etc. Takeaway: Position your price tag upfront and your clients will be willing to pay top dollar for your services. Many consumers are not seeking the cheapest solution, they are seeking the best solution, and one that is easy of use and delivers a peace of mind along with results. Remove the guess work, need to investigate and mental math, it’s not necessary (in many cases) or favorable to either side. It’s up to you as a service provide to create an environment of shared risk/reward.
Where’s the Love? What’s better feeling is there knowing help is just a phone call, text message, direct message, or email away? For most consumers, this sentiment can only exist within a fixed pricing model. Takeaway: The On-Demand Equation: Fixed Pricing increases Access + Engagement and Collaboration resulting in Better Working Relationship/Optimized Results.
It’s really easy to fall behind with an hourly billing model, you’re literally creating an income ceiling, meaning you are limiting the amount of money you can make. How? I’ll let you know in Part II of this post where I’ll make the argument against hourly billing from a service providers perspective. In the meantime, if you are having difficulty converting to fixed pricing and/or commanding premium prices for your services, let’s chat: BOOK A DISCOVERY CALL HERE.