Ditching Hourly

Hello and welcome to Ditching Hourly. I'm Jonathan Stark. Today I've got an audio excerpt from an answer I provided on my YouTube channel. You can check it out at thejonathanstarkshow.com and it'll redirect you to YouTube if you're into watching videos. Otherwise, you can just listen to the audio here on the podcast. Enjoy. Hey, Jonathan here. I've got a question from Derek Elliott who asks, can you value price your contribution to a team? Value-based pricing works well when you can uncover value in a one-on-one scenario, but if you're only a piece of a project you aren't leading, are you stuck with hourly? Okay, this is tricky. The short answer is probably not, but I will say, let's say this is like an agency model where some ad agency or creative agency doesn't have development talent and they've hired Derek to implement or build an API for some, I don't know, iOS app they're developing. If the agency is the one that got the client, talked to the client, defined the project, all of that information, then it's going to be impossible for Derek to literally value price it because he doesn't have a chance to talk to the client about what the value is. Maybe the agency did, probably not, and even if they did, they might not, probably won't share it with Derek. So odds are pretty high that you won't be able to value price it. You could fixed price it though, meaning that you could talk to them about, you could talk to the agency about what it is that they want done and you could say something like, well, I think this is going to take about X number of hours times my hourly rate, which works out to $10,000. So we can kind of roll the dice and go with that, or if you want a fixed price, I'll do it for $18,500 and you can just keep using me until this is done. And a lot of companies will, maybe not an agency, but like a, I don't want to say a normal business, like a business that is directed, yeah, I don't know. I don't know how to describe it. I mean like a normal, like the client in this case, the client that hired the agency. If you're talking to someone way up at the top of the company, or I suppose it's true for the agency too, if you're working with someone at the top of the agency, they might feel the risk of that clock ticking, that hourly billing, and they might not want it. They might be getting a fixed price from the client. They might know that they're getting $150,000 from the client and they look at your piece and they're like, well, it would be nice to kind of hedge our bets and just go with the $18,500 and then know that we aren't going to go over budget, you know, and then it's fixed. So if you're talking to the right kind of person and they're a little bit risk averse, they might pay a serious premium, 85% premium to get a fixed price instead of this hourly business. Now, why this is good for you, potentially, is that you could finish your work very quickly. Now you're incentivized to work as fast as possible, still deliver good work, but work as quickly as possible and to achieve the stated goals. Now, if you can do it really quickly, you might end up with an effective hourly rate much higher than you would have if you just did hourly. So it does have some benefits. The problem is when you're working through an agency, if you give them a fixed price, you can't control scope. Like if they're bad at managing projects, then the client might sort of scope creep them all over the place and they might not care because they might be getting paid hourly. So if they keep changing the goalposts or moving the goalposts while you're working on a fixed price, that's pretty scary, that's risky. But I do know people who have long-term relationships with agencies who know that the agency is great at managing the projects. They know that the agencies are comfortable pushing back on clients. And in a case like that, with a relationship and some trust, it might work out fine when your contact comes to you and says, hey, we've got another project for you. And you say, how about this? This time around, I'm also going to give you a fixed price and we can work it like that and just give them the option. It's not a value price because you have no way of knowing what the value to the client is. You weren't in that conversation. But it's still a fixed price which disconnects your time from your money, which means that getting more efficient, more effective, faster, buying tools, using open source, all of this stuff now becomes a way for you to leverage your expertise. Like you know where all of these special tools are, whatever. You know what, you've got code libraries, you've got repos, you're amazing with like a web flow or something. You know your tools so well that now it pays, it is more profitable.

to be fast and good, but fast. So if you can deliver more quickly, you make more money. But it is contingent on you believing that your contact at the agency is gonna be able to control the client. So you're kind of outsourcing that piece of it to them. So if you trust them and they're willing to accept a fixed price, you can drastically increase your effective hourly rate. So hopefully that helps. I'm Jonathan Stark. If you have a question for me, you can hashtag AskJonathan on YouTube, Twitter, or LinkedIn, and we'll find it and add it to the queue. See ya. Would you like to learn how to get paid what you're worth? How about selling your expertise and not your labor? We work through all of this together in the pricing seminar. Pre-registration starts soon, and you can sign up to be among the first to know when early bird pricing is announced at thepricingseminar.com. That URL again is thepricingseminar.com. Hope to see you there. Hey, Jonathan again. Do you have questions about how to improve your business? Things like value pricing your work instead of billing for your time, or positioning yourself as the go-to person in your space, or maybe productizing your services so you never have to have another awkward sales call or spend hours writing another custom proposal. Book a one-on-one coaching call with me and get answers to these questions and others in the time it takes you to get ready for work in the morning. Best of all, you're covered by my 100% satisfaction guarantee. If at the end of the call you don't feel like it was worth it, just say the word and I'll refund your purchase in full. To book your one-on-one coaching call, go to jonathanstark.com slash call. C-A-L-L. That URL again is jonathanstark.com slash call. Hope to see you there.