Why Hourly Pricing is Like Punching Yourself in The Face

(And How To Not Be Punished For Being Good at What You Do)

By Sabrina Smelko of Hands and Hustle

Pricing creative work (or any work for that matter) is without question one of the hardest things to do.

Oftentimes it may seem like you’re assigning an arbitrary rate to something — and to be honest, in some cases that’s all you can do (but I’ll touch on how to make this guess-work not so guess-y later).

So people turn to charging hourly because it seems easier than conjuring up some random flat fee, but my friend, you’re only punishing yourself by doing this.

Pricing hourly can be a slippery slope that leads to being underpaid, bitter and anxious. It’s counter-intuitive to growing as a professional. And that’s no fun.

To start, let’s play pretend: You’re just starting out as a new designer and you’re charging $50 hourly. Project X takes you 10 hours, so, as math has it, you get $500 for the job. Years later, you’re more experienced and your skill level is far better — you work faster, you’re more efficient and a more well-rounded human being — and that same job could now be done in half the time, meaning you’d get $250 for it. That’s right — you, a more experienced, advanced designer, are making less for all of your experience and knowledge. (No thank you!) So, for the sake of argument, let’s say over those few years you were smart enough to increase your rate from $50 to $100 (a 200% jump which I guarantee clients will notice and do the math on), you’d still only be making $500, which, need I remind you is the same as you did when you first started. (Ah!) And what’s worse? Your clients will likely turn their nose up at your price increase as if you think you’re somethin’, pinch the pennies and (in some cases) call you out, which, yes, happens. In the case your client is less freaky-outy, you might instead get told, “Listen: you’re good at this and it’s easy for you, so can you have a new pricing model where your fee changes deepening on how easy a project is for you to do?” And, feeling defeated, you may cave, but fight that wimpy urge! You should respond with, “My time is worth my time,” but this response is often misunderstood (I know from experience), which leaves both the client and you a little limp. (Aside: How shitty does it feel to have someone tell you your job is easy?)

But wait… there is one proven way to make more money with hourly pricing and that’s by lying and finding ways to spend more time on a project while you’re client is trying to do the opposite. Doesn’t that sound like a great idea? No, it’s extremely awkward is what it really is.

Lesson learned: You should never be paid less simply because you’re good at something. In fact, you should be compensated fairly for that expertise. How easy something is for you to do should never dictate pricing.

But for the sake of argument, let’s conjure up a second fabricated scenario: Jim the plastic surgeon has been working in his field for over 15 years. He’s experienced and skilled and has worked on so many cases that he’s learned those unteachable things while doing his job that can only be learned from experience. He’s become so good at what he does, he might even say his job is easy to him. Would you not expect to pay more to be seen by him over the green guy, straight out of school? Or would you get your bill and say, “Hey, that took you half the time it took the other guy and it seemed to come so naturally to and easy, why are you charging more?” It seems ridiculous, doesn’t it? But that’s how creatives who price fairly are treated all the time. Swap in Jim’s job of being a surgeon for any other job (other than being a creative), and it’s the same case. Whether Jim’s a mechanic, dentist, psychologist, accountant or a plumber, you expect to pay more for his expertise and specialization. But add in other factors creative’s have to deal with such as tight deadlines, being expected to work at the jump of a hat on nights or weekends, the “fun” factor (where clients think you’re worth less because your job is “fun”) and the lack of security that is being self-employed, and it’s even harder.

It’s completely unfair to be punished for being good at what you do. And that’s the problem with hourly pricing: it’s counter-intuitive to how you grow professionally.

(And, as a small departure from the main topic, recognition isn’t payment. Exposure isn’t payment. In his right mind, Jim would never do work for free just because he was operating on Beyoncé and she might tell someone. In fact, you might charge more because there’s more pressure at stake! Or, if it’s worth it to you personally and that’s more valuable to you than anything in the work, which might be that case with Queen Bey, then go ahead — But prices should never be lowered because you should be so grateful to be doing and getting the work. If you feel greasy about it, it’s likely greasy.)

So what should you do? How should you price? There are so many factors that come into play with pricing, and, I’ll be honest, from time to time I choose an hourly pricing model for very specific jobs and for certain clients, but in general pricing a flat fee based on value is typically more fair for everyone involved. Value-based pricing means you price based on a few factors (yes, one of which is your time!)

  1. Your time spent.
  2. Your skill level and experience.
  3. Your unfair advantage. (What you can do that’s harder for other people to do — be it your speed, your ability to work overnight, your unique and hard-to-otherwise-fine style or technique.)
  4. The actual scope of the work (what’s really needed)
  5. Details such as usage, due date, number of anticipated revisions, the size of the client etc.

Pricing should be also rooted in how valuable you are right now to them and what’s that worth? No, I’m not suggesting if someone’s in a pickle for work and only you can do it, you charge “one million dollars!”, but your availability and exclusivity is worth a bit of a premium. I’m not suggesting you grossly over-price more than what you’re worth or trick your clients, rather the opposite. The more you can openly chat with your clients about your value-based pricing model and why that’s your approach over hourly, it’s hard to argue how completely fair that is for everyone, including them. And typically clients like a flat, value-priced fee upfront anyhow. It means less guesswork later and they don’t get stuck with a bill they didn’t anticipate.

Still confused? I don’t blame you, pricing is something I still find difficult from time to time, but as long as you respect yourself enough to get paid fairly, you’re not only making enough to live, but you’re helping the integrity of the creative workers everywhere. (Nothing says intentional friendly fire and undermining your pals like spec work! Here’s why it’s bad) And, to help you figure out what that magic number is, there’s dozens of calculators and pricing charts online, the The GAG’s Ethical Guide for Pricing, and people who champion for getting paid fairly like Jessica Hische, but in the end, only experience can get you pricing confidently.

So, you! If you plan on getting better at what you do, please do yourself a favor and consider charging based on value rather than by the hour.

Originally published at handsandhustle.com on February 10, 2015.