Boost your freelance income by switching from hourly to value pricing

switch from hourly to value pricing

Hourly pricing limits your income and is a terrible way to measure your content’s value to a client.

When you’re starting out as a freelance B2B writer, charging by the hour sounds like a fair and straightforward way to go. But before long, your writing skills, systems, and time management grow sharper, and you’re producing content that’s twice as strong in half the time.

If you’re still charging by the hour then, you’re earning half the money while delivering a much better product (and faster) than inexperienced writers.

Not so fair anymore, is it?

Plus, time spent on a project is a terrible way to measure its value to a client.

Can you imagine if doctors only charged you for the 15 minutes they spend talking with you? But you’re not buying their time; you’re buying health improvements.

Similarly, your clients aren’t buying 500 words, or whatever the assignment may be, just because they like words. They’re paying for the transformation those words will bring into their business.

Maybe that’s more sales, more engaged prospects, a stronger reputation, repeat purchases or upsells from existing customers. Any of those things is worth a lot more to your client than your time. Who cares how much time you spent on something if it can deliver those kinds of results?

But how do you transition to value pricing?

A year ago, I attended the Double Your Freelancing Conference, where I heard pricing expert Jonathan Stark speak on why and how to embrace value pricing.

Jonathan highlighted a few problems with hourly pricing:

  • It misaligns incentives for you and your client.
  • It allows you to get started on a project before you fully understand the motive and goal driving it.
  • It discourages you from becoming more efficient.
  • It limits your income.

By contrast, value pricing, which Jonathan calls a “fixed bid on steroids,” enables you to charge considerably more because it’s tied to the outcome your client craves, or the problems he’s paying you to solve.

To set flat rates based on value, Jonathan advises you ask deep questions to uncover the financial pain that’s driving the prospect to seek you out.

“I don’t want to assume what problems you’re trying to fix, so I’m going to ask you a few questions to make sure I deliver what you need…”

“Why this project and why now?”

“What happened that made you seek out a writer?”

“What are you hoping to get out of this?”

“What’s [that outcome/a typical sale/a recurring customer/X new leads a month] worth?”

Here’s the value of that information in terms of coming up with your rate: If the prospect wants your content piece to drive more sales and a single sale is worth $4,000, then you know charging $2,500 for that piece is still a great deal for them.

(By the way, Jonathan walks away from prospects who can’t or won’t answer these types of questions in their first call.)

Once you’re clear on the prospect’s pain, keep your proposal short, simple, and focused on the outcomes you’ve discussed. Paint a clear, before-and-after picture of what your content will do for their business, and anchor your price against that value.

Having made the decision to change your pricing model, it’s easy to do so with new prospects: You simply quote them the new rate, and that’s that. They don’t know any different.

The tricky part is making the switch with current clients who’ve grown used to paying you by the hour, or even by the word count (another terrible way to measure value, by the way).

In that case, Jonathan suggests a couple of ways to ease them into value pricing (and I’ll add a couple of suggestions of my own):

  1. Add a flat-rate option to an hourly agreement.
    In other words, offer two pricing options — an hourly and a flat-rate one. (Just make sure both are profitable for you).
  2. Charge a flat rate for a small part of a larger hourly project.
    (Like research & discovery, for instance, or social media teasers to drive traffic to other content pieces.)
  3. Create a productized service.
    That’s a service package with set deliverables at a flat fee (e.g., 1 white paper, 4 blog posts, 12 social media teasers, and sourcing of free stock photos for $X). We talked a bit more about productized services here).
  4. Give clients a heads-up that you’re transitioning to flat rates only, effective on X date.
    Then do it. Don’t cave to resistance.

Should you get pushback from clients who are unwilling to let go of the hourly arrangement, step up your prospecting. Then, as you attract new clients at the new pricing, replace those that are no longer profitable for you.

Sometimes you have to let go of the old to make room for the new, and it’s completely normal and expected that you’ll outgrow some clients as your business evolves.

How do you charge for your services today? What’s holding you back from increasing your rates or changing your pricing model? Share below or let’s talk it out in our private Facebook group.

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