How to Respond When Clients Ask “How Much Do You Charge Per Hour?”

A week ago I promised my mailing list community that I would share with them a script for responding to prospects when the first thing out of their mouth is What’s your hourly rate?

I feel you!

It can be the most irritating question in the world when it’s pretty much the first words they utter right out of the gate.

But guess what? You have a lot to do with why they are asking that in the first place.

And no, it’s not because you don’t have pricing on your website. Pricing for professional services doesn’t belong on your website.

But we’ll discuss that in a moment.

First, I want to preface things by saying that the response to that kind of question is different depending on the context.

For example, selling products is a completely different ballgame than selling professional services.

There’s a completely different context, different process, and different conversation involved for each of them respectively.

On my blog, we’re always talking about retained ongoing monthly administrative support. This is what is known as a collaborative partnering relationship.

This is not the same thing as selling products or piecemeal project work (i.e., secretarial services).

So, it’s important that you understand that the scripts I’m going to share with you are for the context of retainer clients (i.e., clients who pay a monthly fee for ongoing, monthly administrative support).

Unless you are selling a cheap commodity, clients need have context in order for your fees to make sense.

If there’s going to be any kind of mutually beneficial relationship, you can’t answer that question off the cuff. There’s a bit more to it than that.

There are simply things you need to find out first from the client before you can even begin to understand their needs, goals and challenges, and then devise your support plan recommendation for them.

When the first thing a prospect asks is What’s your hourly rate?, that’s a clear sign that:

  1. they have not bothered to read your website (and, thus, are not a good prospect), or
  2. your website has not properly educated them, and failed to provide them with the right information in the right way (which is more commonly the case).

When you don’t provide your site visitors and prospects with thorough information, you don’t give them any other criteria with which to evaluate the value.

They will always resort to the pricing question when that’s the case.

This is something you can correct:

  1. Stop parroting the same tired, boring, homogeneous (and ineffective) party line that EVERYONE else in the industry is reciting chapter, line and verse. You’ve GOT to stop this people, seriously! This is your business, not a high school clique where you’re only allowed to belong if you conform with the crowd. Blending in is NOT what you need to do in business; you need to STAND APART from the crowd, come up with your own message and speak in your OWN voice).
  2. Adding more thorough content and information. Because you don’t want them asking How much? You want them saying, I’m intrigued. I can see you understand the business and profession I’m in and the kind of challenges and issues I face in moving forward. I’d like to schedule a consultation to find out more about how you can help me achieve X, overcome X or solve X.

In the context of your business, as an Administrative Consultant who works with clients in an ongoing support relationship, your goal is to find retainer clients.

What you need to do in that case is gear all of your information toward that goal, educating clients about what you’re in business to, how you help them, how it works, how you work together, etc.

Think of your website as a form of mini or pre-consultation itself. Have it answer all the questions a potential client could conceivably ask you or want to know.

The more information you provide, the better you prequalify your prospects (because the ones who are not a fit will weed themselves out) and the more likely your ideal prospects will take the next step (i.e., scheduling a consultation).

You want to provide a nearly exhaustive amount of information on your website — everything except pricing.

There are many reasons why pricing on your website works against you as a professional service provider:

  1. You are not a cheap commodity that can only be quantified by price. When you portray yourself as nothing more than something on a shelf that they can get at one of a thousand other places (the only differentiating factor being your rates), you actually create the very price-shopping mentality you seek to avoid. You want clients who are truly interested in the value of the work in helping them move forward, achieve their goals, overcome challenges and grow their business. By insisting on that standard and holding yourself and what you do in that esteem, you weed out the cheapskates and those only looking for quick fixes. If you make people who can’t pay, don’t want to pay, or who are impatient with your process your clients, you will be the engineer of your own business unhappiness, unprofitability and unsustainability.
  2. You cut your nose to spite your face. Some people argue that posting prices helps get rid of the price shoppers who waste their time. But when you do that, that’s the thing nearly every visitor to your site zeros in on to the exclusion of everything else that’s more important — including all the information that conveys your value. There are far better ways to prequalify clients, my friends!
  3. You throw the baby out with the bath water. Here again, when you try to get the price-shoppers to weed themselves out, you’re also scaring off all kinds of other perfectly suitable client candidates who may simply misunderstand what things would really cost and mistakenly think they can’t afford this kind of support relationship. They need context, but they’ll never get that far if you scare them off before that can happen.
  4. It’s not the time and place. Ongoing administrative support is a bigger relationship. It requires more of an investment and commitment from the client, and, therefore, requires a bigger conversation. Prospects need context in order to make sense of your fees and that only happens in consultation, not on your website.

So this is what you’re going to say when the first thing out of a prospects mouth is What’s your hourly rate?:

I can’t answer that question off the cuff because my goal is to ensure you get the best support you can afford. Your business needs, the challenges you face and your underlying goals and dreams are unique. We need to meet first in a consultation where I can gather more information and learn more about those things before I can create a support plan just for you and tell you what it would cost.

There is a way to provide a frame of reference for potential clients that doesn’t promote price-shopping. You do that by simply letting them know the minimum monthly investment they would need to make in order to work together. So what you would add onto the comment above would be this:

What I can tell you is that the minimum monthly investment any client would need to make in order to have my ongoing monthly support is $X per month.

And on your website, instead of listing fees, you would instead talk about your pricing methodology and its benefits, how and why you bill as you do, and include that statement about the minimum monthly investment they would need to make.

Remember, the goal is to get them in consultation and talk to you further, not your website, so that you can provide needed context for your fees.

When prospects ask the rate question, the other thing they’re trying to determine is whether or not they can afford it.

Letting them know the minimum monthly amount helps them do that in a way that gets them to look at fees from a more value-based perspective and encourages the opportunity for further discussion.

My wish for you would be to get away from billing by the hour (selling hours) entirely because it cheats you and cheats the client by putting your interests at odds with each other.

It’s a very archaic, UN-beneficial way of charging for your value — for you and the client — and actually discourages prospects from seeing your value.

Your goals for getting paid for the value of your time and expertise should be in sync with the kind of goals and results the client is looking for from the work and how that work achieves their objectives and helps move them forward in their goals and the pursuits they’re aiming for.

You don’t want that question boiling down to how fast you can kill yourself doing the work so that the client doesn’t have to pay as much. That will be the death of you and your business.

When you employ my value-based pricing methodology, here’s what you get to add to all of the above:

I don’t charge by the hour and here’s why:  hourly billing cheats you because it puts our interests at odds with each other. Billing by the hour, I obviously make more money the longer things take, and you, naturally, prefer things to take the least amount of time possible so that you don’t have to pay so much. That’s a horrible dynamic for us to work together in! And so I don’t. The work that’s going to truly get you results, move you forward and keep your business humming along smoothly can’t be dependent upon a clock. And when you work with me, it doesn’t. I want to achieve real results and progress for you. That can’t happen by selling you hours. Your needs, goals and challenges aren’t cookie cutter and so I don’t offer cookie cutter solutions. Instead, what I do after we meet in our consultation is come up with a support plan recommendation. From there we can hone it until it’s just the right fit. And you will pay one simple monthly fee for that support. That’s it. No worry about hours running out. No overages. It’s easy to budget for and all our focus will be on the work and accomplishing your objectives, not on the clock.

There’s much more to learn and understand when it comes to pricing and how to talk about fees with clients. I’ve packaged all that up for you in my Value-Based Pricing and Packaging Toolkit, which I encourage you to check out. (Be sure to read the testimonials and success stories.)

12 Responses

  1. Nicole Barton says:

    Absolutely AWESOME post. I so desperately needed this!

  2. This method of pricing totally makes sense to me and my way of thinking. I HATE watching the clock!! I’m efficient at what I do and don’t want to cheat myself out of money because I get things done faster than someone else would. I’m so glad I haven’t published an hourly rate! Thank you Danielle.

  3. Judy Reyes says:

    Thanks for putting the right words in my mouth! Seriously, this is awesome information and so helpful. I will be burning this into my brain.

  4. Stephanie says:

    Danielle – this is great, I enjoyed the article and am so happy to have the perfect responses to those kinds of questions. Thanks so much!

  5. Monica says:

    Wow, Danielle, thank you SO much, you really put things in perspective! You’re the best!

  6. Kathy says:

    Thanks for the push in the right direction with this, Danielle. I’ve offered both methods in the past, but have always preferred the service fee above the hourly rate.

  7. Chris says:

    Excellent article. I agree about avoiding the commodity trap. There’s a group of clients that shop/buy on price but they aren’t the clients I want.

    Thanks for another good article.

  8. A few additional thoughts about why pricing doesn’t belong on your website:

    Who cares if you would move on if prices aren’t on a website? You aren’t your ideal client and you need to be paid well. If you are charging more than cheap commodity pricing, it’s YOUR job to inform clients of your fees, not your website’s.

    Not displaying pricing on your site has ABSOLUTELY NOTHING to do with trying to manipulate clients into contacting you. It’s not about that whatsoever in any way, shape or form. It’s about providing proper context.

    If you can’t articulate your value to prospects without pricing on your website, you do not know how to market your business.

    Prospects are not contacting you not because your pricing isn’t shown. The problem is your message and lack of a compelling, irresistible value proposition.

    Pricing is a detail, not a value proposition.

  9. Willi Morris says:

    Oh, this is extremely interesting. I really think maybe this type of pricing methodology should be trademarked. I had read something on your Facebook about how you were concerned people were stealing the concept.

    I’ve always heard about retainers based on the services you require, but I’ve never heard of it referred to as “value-based pricing.” Definitely will use this terminology on my website. And thank you for justification when folks say that not putting prices is being deceptive.

  10. Well, there’s a bit more to it than that. 😉 Value-based pricing isn’t simply calling retainers value-based. They aren’t value-based unless you know how to apply the value-based methodology.

  11. Geniece says:

    Hi Danielle,

    Just stumbled across your article on linkedin. I love this. I currently have packaged pricing on my website but haven’t always and my not leave it there. I do pre-qualify potential clients when they contact me to set up a consult.

    I send them a list of my pre-qualifying Q&A document that I have them review before I will even schedule the consult. This way they know how I work and many of their questions will be answered before the consult so that I don’t waste their time or mines.

  12. Anne says:

    Thanks so much for this

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