How Billing by the Hour Is Killing Your Business (and What You Can Do About It)

Here’s a video I made a few years ago to help people understand how billing by hour (selling hours) is keeping them broke and killing their business.

This can be a difficult concept to understand at first. For many folks, it’s not until they’ve been in business for a bit that they realize the dilemma. It’s usually then that things finally “click” and they get it.

Then, there are people who understand the problem immediately and want to avoid it altogether in their practice.

Whatever camp you’re in, my Value-Based Pricing and Packaging Toolkit will show you how to stop selling hours (and selling yourself short) and learn how to price and package your value and expertise instead.

I’ve been practicing and studying this methodology since the 90s and been teaching it to our industry since 2004. I introduced the concept and adapted the methodology for our industry and I’m really the only person in our industry uniquely qualified to show you how to implement in your practice.

4 Responses

  1. Patricia says:

    Danielle, I came across a prior version of this video recently and immediately shared it with my newsletter followers and also in a LinkedIn group in which I am very active. This simple piece of information is priceless.

    I have an IT and technology background spanning 20 years.When my last company laid off hundreds of people all in a sweep I decided to return to my first love – administrative assistance. I’m anal about organization, have the technology background to effectively work with my clients from a distance and I was excited about my future. It wasn’t long before I went from $25 an hour to $45 and $55 an hour. But wait a minute. While newbies were impressed at that, it wasn’t long before I realized it wasn’t as amazing as it sounded.

    I’m good at what I do. I work quickly, effectively and meet my deadlines without issue. My clients don’t balk at what I charge. But look at this. If someone charging let’s say $25 an hour takes 2 hours to complete the same task that I charge $45 an hour for, but get done in under an hour, I’m actually earning less. Not to mention there are only so many hours in a day. So even if I’m working 30 hours a week, I’m capping how much I can possibly earn by the physical hours I can work.

    When people realize this, they often go into a panic. What should they do? Drop their current clients and rehash their numbers? Not necessarily.

    I’m not going to drop my longtime clients that I already serve nor am I going to suddenly shift their payment arrangements with me. Some clients have one-off tasks throughout the month that are best met with an hourly rate. That’s fine. A retainer would be out of reach for them. However, for clients and prospects that have long-term projects such as a 6-month social media marketing project, that’s where this works best.

    A few of my clients, for example, throw everything but the kitchen sink at me because they don’t have the time to be bothered with certain email communications, forms that have to be completed, videos and audio recordings that have to be put onto their website and distributed through social media. Those clients work best with flat-fee monthly retainers. I set a rate that basically says as long as we don’t go over x hours in the month, the fee is $xxxx. If we do go over those hours, then I tack on the addition (always warning them with a courtesy email when we’re x hours away from going over).

    In this way, I have a flat fee I can easily budget and my clients aren’t constantly watching hours.They know I am courteous and reliable enough not to surprise them with an extra $300 out of the blue.

    You’re so right, Danielle and spot on with your advice. And I notice this with my clients as well. Almost none of them charge by the hour. If you undertake services with them, this is the fee, you’ve got this much time to use it and that’s that. Learn from those that are succeeding. And don’t worry about pausing, making some changes as necessary and picking right back up. Business is like life – it’s never stagnant. It’s constantly evolving. And it should be.

    Great job, Danielle! See you at the top!!

    Cordially,
    Patricia Nixon
    Nixon Virtual Strategies
    http://www.nixonvs.com

    The Power of Delegation
    recognized by Forbes
    http://eepurl.com/r-jov – No BS FREE VA Tips Newsletter

  2. Thanks so much for sharing, Patricia!

    By the way, you never have to drop your current clients. In my Value-Based Pricing & Packaging learning guide, I show people exactly how to transition current clients to value-based fees and the language/scripts to use.

  3. Mirna Bajraj says:

    Dear Danielle,

    Even if this is the first time I see this video, I remember having watched another one with the same message: stop billing by the hour! How helpfull was your message to me Danielle! and proof of that is the fact that nowadays I am not billing my clients by the hour any more. This made a huge difference in my practice, believe me.
    Thanks for such a good piece of advice.
    Love your articles! ๐Ÿ™‚

  4. You are so welcome, Mirna! I always love hearing from you. ๐Ÿ™‚

Leave a Reply

If you'd like your photo to appear next to your post, be sure to get your gravatar here.

Please copy the string BsejWP to the field below: