Comments on: Charging For Time is a Bad Idea

By: Freelance Work & Contract Jobs: Free Portfolios : Outsourcing : Post Contract & Consulting Jobs : Find Consultants & Freelancers

Mon, 26 May 2008 03:46:49 +0000

[...] Charging For Time is a Bad Idea [...]

By: » Pricing and Positioning Your Rates Amongst Other Freelancers and Businesses - Blog for Freelancers and the Self-Employed

Sat, 05 Apr 2008 03:04:03 +0000

[...] Rate Setting Hourly Rates for the Self-Employed Entrepreneur: Don’t Forget the Hidden Costs Charging For Time is a Bad Idea How to Set an Hourly Rate for My Consulting Firm How to Set Your Freelance Writing Rates How do [...]

By: » How to Figure Out Your Rates - A Guide for Freelancers & ConsultantsAll Freelance Work Blog : Tips and Advice for Freelancers & Self Employed

Tue, 01 Apr 2008 06:05:55 +0000

[...] Charging For Time is a Bad Idea [...]

By: Hourly Rates, Eliot Spitzer and Formulas for Follow-Up: 9 Links Worth a Read « Brett’s Blog

Sat, 22 Mar 2008 15:24:02 +0000

[...] By Project, Not By the Hour: If you keep up with my blog on a regular basis, you know I’m anti-hourly rates. The Freelance Switch, one of my favorite new blogs, nails it on the head in this post. In [...]

By: bestchildrensbooks1

bestchildrensbooks1 — Tue, 11 Mar 2008 20:46:56 +0000

Great Post & thanks for sharing.
Times alway not enough for me

By: Brett

Brett — Sat, 16 Feb 2008 17:39:27 +0000

But can’t you plan for the meetings and phone calls and include that in your pricing?

Your point on making the client move faster does make some sense. The problem I have with charging for time is that you have to be working to make money, whereas a results-driven compensation works even when you’re not. Granted, you have to put in a set amount of time to get the results, but there comes a time when most of your work is done and the “machine” you’ve built just keep rolling.

By: moth1

moth1 — Thu, 14 Feb 2008 05:25:33 +0000

well it’s easier for the consultant to get screwed if they aren’t charging by the hour…endless meetings and phone calls can easily sap up a consultants time which cuts into their pay.

also, hourly rates can force clients to move quicker on things that they have to provide a consultant. knowing that they are “on the clock” is good motivation for them to provide the consultant with what they need.

it works both ways. a consultant who works on multiple projects for multiple companies needs to make sure they are getting paid for every hour they work.

By: Brett

Brett — Wed, 13 Feb 2008 22:41:46 +0000

Steve and Bill – both great points.

Granted, you can get a great deal sometimes out of the hourly rate. It definitely takes time for your client to get into the comfort zone of what you can produce over a given amount of time before they like the idea of paying for hours.

However, why not just quote them a set price for a project, in which you’ve accounted for your time?

In addition, couldn’t a ‘pay by results’ compensation actually pay off more for the service provider in the long run, and yet still be a good deal for the client cuz you know you’re getting something in return for it?

I deal more with smaller businesses, so I guess I’m more exposed to the hesitancies of new relationships.

By: Bill

Bill — Wed, 13 Feb 2008 19:44:47 +0000

I think the key phrase, Brett, is “when starting a new relationship with a client.” We have a very large client that we have worked with for many years that asks us to charge by the hour because they have overcome the two points listed above (the know what to expect – because they used to provide the service in-house and they trust us not to squander the time).

Steve also made an important comment. He used the word “might” in both of his examples. “Might” is just too speculative a word for most new relationships (that is why we say “I do” to begin marriage instead of “I might”).

Most of our new clients do not want us to work by the hour because the risk is shifted back on them, which adds friction. Many of our new clients want to “taste” what we have to offer as long as it fits within their pre-defiend budget. Once someone has tried your valuable offerings and trust is established, they might then be willing to risk more on your “might” and have you work by the hour.

By: Steve Rosenbaum

Steve Rosenbaum — Wed, 13 Feb 2008 14:51:54 +0000

Sometimes you get a real deal when you’re charged by the hour. These are the cases where the value you receive is well beyond how long it takes. For example, if you were charged by the hour for something like a logo, it might take only a few hours to create something you like but it might be used on millions of your product.

A lawyer might be cheap by the hour if you win a multi-million dollar settlement.