I use the word value here for a specific reason. In a lot of professional service-oriented business, the tradition is to charge for time (by the hour). But the real question is what’s the value of this service, or any other service you or I might provide. This value can be assessed in a number of different ways, but just like with an employee position, time is only one aspect of the value equation.
For a prospective employee/job hunter, value is also about experience usually first (because it’s easy to measure, not necessarily because it’s most important for a good job match), talent, and attitude. But I’m not searching for a job. Like many of my design clients, I’m running my own business, a creative business whose value can be very subjective (more emphasis on talent and attitude than experience).
Take a fine musical instrument maker. Yep, they are paid for their time, but much more importantly, they are paid quite a premium for their talent and skill level (not necessarily the same as experience by itself). When I ran customer service for my husband’s silver coin ring-making business several years ago, I noticed that raising prices incrementally as he gained skill and creative beauty in his rings did not negatively affect sales; more the opposite. Like a lot of professional service providers, he created a lot of custom products (for wedding rings and anniversary commemoratives), and people equated higher prices with better quality and “exclusive” custom work. They saw the value for themselves.
I think many of us who provide support services for creative projects like writing or visual art, or who provide personal coaching, etc., are not taking into account the potential perceived value of our talent and skill. We may just be thinking in terms of the time it takes for us. You know what? We’ll never have a truly profitable business if we think solely in terms of pricing based on time.
Let’s shift the focus to our customers and what they value instead (that’s a partnership). I believe that folks who need my design services usually have a budget or idea of what they can invest in a website design. And I think the customer is better off if they don’t pay me just for my time. They should pay me for the quality of results I provide for their project. That means paying me for my talent and knowledge/skill. So, I structure my project fees to reflect that talent and knowledge, and also whatever time it takes me to get a certain type of job done. And that sometimes means that people can’t afford me, but the ones who can are whom I should be creating for (doesn’t mean I can’t do the occasional pro bono or barter project, but that shouldn’t be the main part of my income).
I was inspired to write on this topic after reading Chris Lema‘s great post on why he doesn’t have an hourly rate (go here to read his). He’s a WordPress geek, which is good for me, but many of his posts are valuable for all service entrepreneurs. He also tells great stories and keeps his posts short (although the linked one here is a bit longer than his usual). I highly recommended his writing for anyone running a business online, coder or not.
Let me know how you price your services, and how you and your customers decide on the value proposition. I’d love to know. 🙂