Pricing Fuck Ups. Ep08. Billing by the hour. The trap to inefficiency.
This project will take 100 hours. My hourly rate is $50/hr. A 5K gig… aproximately
Sounds good, right?
Unless you’re in your customers’ shoes. If you’re really customer centric and are looking for customer satisfaction, this doesn’t make any sense. Couldn’t you do it in less time?
We’ve been taught that hourly billing is the way to charge for work — especially independent work. I got a project, estimate how long it might take, do some basic math, throw a number and pray it’s attractive enough to get the gig.
It’s a trap to inefficiency.
The faster you get to the desired result, the less money you make.
- It’s all about us, never about the client. Like we deserve people to pay us for how long it takes us.
- We get the dilemma between working faster and better to the results or working slower to make more money. Or plainly lie on the timesheet.
- It’s not a price that we give, it’s an estimate. And estimates ALWAYS go over budget.
Fears that lead to this approach
What if I underestimate the project? What if I can’t deliver?
If you underestimate the project, you’ll learn and price it better next time. If you can’t deliver, learn and build competence quickly. Or change professions.
Detach your time from money. They’re not entangled and time — to create value — is irrelevant.
Give a fixed price. That will push you to get better at what you do. The faster you get to the desired outcome, the more profitable you’ll be.
Finally, focus on what your prospect is trying to get. Once you help them with that, how long it takes will not matter.
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