The Value Mindset that Grows Money
You’re really not selling time. So why position yourself as a commodity? When you stop charging by the hour, your clients no longer consider your services as an expense. Instead they view what you offer as an investment.
What you don’t realize is that charging by the hour undervalues your expertise. As your business grows and your expertise improves, your value increases. So why underplay that?
At the same time, your work is more effective than when you first started your business. So you end up making less money although your level of service has improved. This means you actually get penalized for doing something better.
Re-envision Your Service
The solution to fixing the hourly rate trap is to charge for the result. Instead of charging for time, charge for your client getting a specific outcome or benefit. This pricing strategy acknowledges your years of experience.
Your best clients hire you because you’re great at what you do. If you want to attract more great clients, then emphasize your experience instead of competing on price. Your clients really don’t want to be watching the clock when they work with you.Your clients really don’t want to be watching the clock when they work with you. #smallbusinessgrowth Click To Tweet
This may seem counter-intuitive, however, quickly resolving a problem has greater value than dragging one out. People pay premium prices for express services and overnight shipping.
Stop Charging by the Hour
Lee Sturgiss at Polar Creative explains the thinking.
At Polar Creative we use a flat fee system, pricing all our projects up-front and providing our clients with a full, detailed and above all clear proposal before any work begins. Our prices are based on value, taking into account the amount of time we anticipate the project to take, the full scope of the work, how difficult it will be to achieve, any deadlines and, ultimately, which of our skills will be required and what that is worth to the client. We believe we offer a fair and competitive price when you consider the expertise we have acquired and the portfolio of work we have behind us. We would never consider an hourly rate as it undervalues our service and thus doesn’t provide the client with the quality they deserve.
How to Reframe Your Service
Your real value lies in the ability to fix your client’s problem. Package, or bundle, your services. This emphasizes results rather than time. It’s one way to stop charging by the hour.
Shift your mindset away from hourly billing. Consider pricing that highlights a specific outcome for your client. Whether you are a graphic designer or a bookkeeper, your clients come to you for solutions and answers. They need outstanding graphics or to get their books done. You are the solution.
Start to develop your package.
- Define. List all the benefits your ideal client receives when they use your service.
- Results. Be specific about everything they achieve as a result of working with you.
- Fine tune. Set aside time to fill in the details. Identify all the aspects of your process.
- Steps. Create order out of chaos. Figure out the steps and their sequence.
- Articulate. Get comfortable explaining the steps that get them to that specific result.
Congratulations. You created your first package.
ADVANCED TIP: Because you are good at what you do, you may need to backtrack as you outline the detailed steps. Detailed step-by-step increments give your clients an overview of how you achieve a solution.
Because you take your skills for granted, it’s easy to overlook all the steps you provide your client. Step into their shoes for a moment. Think of your client’s journey. Then consider what they need to know to close the gap and fix their problem.
If you offer a variety of services or have add-ons be sure to price these in the same way. Focus on the outcome for your client.
Calculate Your Package Fee
Your profitability rises when you stop charging by the hour. Value pricing is not connected to the cost of delivering your service. Instead, your fees are directly connected to the benefit that your client receives.Your #profitability rises when you stop charging by the hour. Value pricing is connected to the benefit that your client receives. #smallbusinesssuccess Click To Tweet
Most consultants tend to undervalue their time in terms of the experience and skills they bring to the table. As you prepare your package, remember not to price it according to time.
Focus on your expertise and how your clients benefit from this service. You want to price your packages so both sides, you and your client, are satisfied with the investment and benefit from the arrangement. Don’t just consider your profit. Think about how they profit from investing in your service.
Benefits of Package Service Fees
Value pricing is the quickest way for your business income to increase without additional time spent working.
Differentiate yourself from other businesses. Then clients will view you in a new light. Consider this: your ideal client is hungry for the outcome you provide.
Packages let you detail the necessary steps that lead to a specific result. This is a win-win for you and your clients.
The quality of your relationship with your client improves when they no longer watch the clock or worry about expense. Value pricing fosters a team approach. The focus shifts to the result and how things improve. That’s because the true value of your service is higher than an hourly rate.
Your service – the same process you always use – transforms from a commodity based on time spent to the beneficial outcome of working with you. Your role transforms into an advisory position. That’s what your client is actually seeking.
When You Shift Your Mindset, So Do Your Clients
The intangible benefit of shifting from charging hourly rates to value based pricing is that you build a prosperous business doing something you love.
As a therapist turned business coach I can help you walk through the steps to get out of the hourly fee trap. My passion is helping entrepreneurs move from over-thinking to action. If you struggle with making the shift, I can help.
Are you ready to stop charging by the hour? Take advantage of my complimentary private strategy session to talk about your three main goals and how to get to success. One simple questionnaire about you and your business is all it takes to schedule your private success session.