http://www.smallbusinessdelivered.com/hourly-pricing-9-reasons-to-stop-charging-hourly-rates.html
9 Reasons To Stop Charging Hourly Rates
When’s the last time you walked into your dentist’s or accountant’s office and said, “I want to buy some hours”? I’d bet some pretty good money that it was never. Instead, you ask to have a painful tooth checked or your taxes done.
That’s because people don’t buy hours…they buy solutions. Hours are an expense…solutions are an investment. And you always want to be talking about the investment.
In fact, hourly rates are rarely in your client’s best interest-or yours. For you, hourly rates…
· Double the trouble. Giving estimates with hourly rates means the prospect can take issue with both the rate itself and the number of hours you estimate. So now they have two fronts to try to needle you about when they want a lower price.
· Cause sticker shock at invoice time. Folks who don’t do the type of work you do or who don’t bother to track how much time they spend on similar tasks are often shocked at the number of hours it takes.
· Instantly brand you. Prospects want a fast and easy decision. If your hourly rate is much lower than the competition’s, you must be an amateur. If it’s higher, then you’re the “expensive” option.
Remember, the prospect doesn’t know it’ll take the competitor take twice as long to do the work or that you automatically include something that they don’t. And since quality of work is so subjective, they may not even bother trying to judge it…because it’s much easier to judge based on price.
· Penalize you for experience. It’s ironic-the more you work with a client, the faster and better you’ll naturally get at their projects…but since you’re paid by the hour, you end up making less. Maybe I’m crazy, but that kind of math just doesn’t add up.
· Involve tracking every smidgen of time. Every phone call you take while you’re in the middle of something else. Every email you write. Heck, even the time you spent brainstorming on the way to the grocery store…are you having fun yet?!
· Mean renegotiating. If you’re going to keep paying the bills, hourly rates eventually have to rise. But telling clients you’re raising them is about as much fun as a root canal. And if they’re a particularly big client, you may end up having to justify the increase, negotiate your new rate, sign a new contract and so on. Every year or two.
· Occasionally spark jealousy. A client once made a snide comment that I should be rolling in the dough, given my hourly rate. So if you work with folks who get a salary, inevitably some will divide it out to an hourly rate and compare it with yours.
Of course, they don’t get that you’re factoring in health insurance, taxes, expenses and so forth that they get in addition to their regular paycheck. All they see is that you seem to be making more than they do. And the resulting attitude can be a pain in the arse to deal with-especially when they DON’T say something and you’re wondering what’s wrong.
· Undervalue what you provide. What’s a new $20,000 client worth…especially over time? Or to have a professional-looking website presence that builds credibility and trust? To finally be pain-free? Or to finally find the career or relationship of their dreams?
Granted, it’s harder to judge worth in some cases. But the value of the solution you provide is certainly worth more than an hourly rate.
· Mean your income is forever limited by the number of hours you can work and the hourly rate you feel comfortable charging. Enough said.