Ditching Hourly

Hello, and welcome to Ditching Hourly. I'm Jonathan Stark. Today, I'm gonna talk about how to grow your business without hiring junior employees. Back in 2006, when I left the firm I was managing to go solo, my dad asked me if I was gonna hire employees. He just assumed I was. And I said, no, no, definitely not. And he asked, well, how are you gonna grow your business if you don't hire employees? So that's what I wanna talk about today. If you have been freelancing or consulting or what have you, and been billing by the hour for a while, you may have discovered that the amount of money that you can make in a year is limited by the amount of hours in a year. So you might be slowly raising your hourly rate and getting yourself as book solid as you can, maybe working 30, 40 hours a week. And at the end of the year, a reasonable maximum is gonna be somewhere around $140,000. And if you've been doing that for a couple of years, it starts to feel kind of limiting. You think, you know, it's great at first, you work your way up. But then when it plateaus there, you start to have thoughts of like, well, how am I ever gonna retire from this? How am I ever gonna grow past this point? Am I stuck? What do I do? So to break through that ceiling, what a lot of people do is they think about or they actually go out and hire employees or they farm work out to contractors and they build out those hours at a higher rate than they're paying for them. So if you're charging $100 an hour and you get a new project, then you would try and find a bunch of people who are maybe $50 an hour to farm the work out to, and then you just sort of manage them. And that, it can work and it's fine, but it does change the nature of your job in a way that a lot of people find distasteful. So if the only reason you're farming work out or you're thinking about farming work out or even hiring employees is to break through that sort of artificial income ceiling presented by hourly billing, then there's another way to do it. And that's what I told my father when he asked. I said, I'm gonna grow my business by getting bigger and bigger customers. I'm gonna have clients who stand to benefit more from the things I do and the outcomes I deliver than others. Kind of like going after the luxury end of the market. And it worked. So the concept is, let's just use an example. Let's say you're a web developer and you, I don't know, into martial arts. So I'm into martial arts. We'll use that as an example. So you could go to a local karate studio and say, hey, I'm a karate guy. I'm also a web developer. I noticed your website is not mobile friendly. Have you thought about doing something about that? And the karate studio is gonna say, yeah, that would probably be kind of cool. We do get a fair amount of complaints about it from our students. And I imagine that people who are looking for a karate studio would be nicer to have a mobile friendly website since so many people are on their phones now. And you could go back and forth and talk about prices. But instead of giving them an hourly estimate, you'd say, well, I'm gonna give you a fixed price for the work and have a conversation with the owner about what sort of benefits they would expect to derive from having a mobile friendly version of their desktop website. And I'm willing to bet that the value that they would get out of it would be relatively low in the grand scheme of things, maybe a few thousand dollars at most. So you would have to set your price somewhere below the value that they would expect to receive. So if you're value pricing this instead of hourly billing, then you're gonna end up setting a price in this scenario, maybe a thousand or $1,500, something like that, maybe 2000. But once you do that job, then you've got this sort of karate studio in your portfolio. You are maybe a karate person yourself. You know the language, you know the lingo. You're in that tribe. You're part of the audience. Instead of going after another karate studio, you'd go after someone who runs a chain of karate studios. In our area, there are a couple of karate studio chains and they share a website. So odds are pretty good that if you talk to the owner of a chain that they are going to benefit far more than a single location studio. So you're kind of leveling up from your experience with the single location place up to somebody who's got a chain and say, okay, let's talk about the benefits that you would get if more people could access your site on mobile or at least more easily. And those benefits, maybe they would be significantly higher, maybe five times, maybe 10 times higher than the single.

location place, which means that you can charge significantly more, double, triple, for approximately the same amount of labor. So, you might be just building, you're still building just one site, maybe a little more complicated. There may be more things to consider, maybe more photos to take or more photos to post or contact information for multiple locations, that sort of thing. It's not going to be a lot more work, though. It's still just a basic website. But the larger chain is going to benefit a lot more, so you can set your price a lot higher. So, now that you've got this sort of vertical mapped out, you've got testimonials from these people, your credibility is increasing, then you can go up to maybe a regional level. Maybe there's a competition that comes through town, maybe quarterly through your town, but they also sort of on tour around the country, and they're doing an event every weekend. And they're selling tickets, and they have hundreds of people pay to participate. Perhaps they have sponsors, so on and so forth. And they don't have a mobile website. So, you could approach those people and say, hey, I'm sort of in this martial arts area. I love working with martial arts people. I do mobile web designs, or I do web design, make sites mobile friendly. Would that be a benefit to your organization? Do a lot of people look for you on their phones? Do a lot of people use their phones while they're at the meet, while they're at the competition? Maybe to track scores or what have you. And they'd say, oh yeah, that would be great. We would love to have that. People complain about it all the time. And maybe we could even have the application form completed on the phone, or maybe over email on their phones. So great, you have a conversation there. And now you're doing the same thing. Still, you're going to make a website. Again, it'll probably be a little more complicated. There are more things to consider here. But it's not going to be 10 times more complicated. But you can probably charge 10 times what you charged the chain. So in these examples, we're going to larger and larger organizations. But you could also just go up the value chain to potentially not a larger organization, but one that really stands to benefit from your work, I mean. So let's say you now have this portfolio of martial arts web work, and you're great at it. You know the ins and outs. You have a million connections at this point. And you start going after sort of martial arts celebrities, like somebody like, say, Joe Rogan or somebody that's starring in movies, martial arts movies, Chuck Norris. And you say, hey, I'm this web developer. I do martial arts. And I'd like to talk to you about what benefits you would get out of having a mobile version of your website. Because I went to your website. I see that it's not mobile friendly. Do your fans complain about that? I see you do these events. You go around and do tournaments. And you do expos and trade shows. Wouldn't it be great if you could have a mobile version so people were on their phones, they could interact with you there? I'm probably stretching the analogy a little bit at this point with Chuck Norris and so on. But the idea is that you don't have to grow your business by adding headcount. That could actually hurt your business. That could decrease your profits if you don't do it carefully. To me, growing your business is increasing your profit. So if you want to increase your profit, and if you're willing to stop trading time for money and switch over to a value-based pricing scheme, then really the challenge is just to find people who benefit the most from your work and work with them. Sell them on whatever it is that you do. And you can charge much higher fees than you would for clients who really don't get that much value out of your work. So it's kind of like going after your ideal clients, the ones that you are meant to serve, the ones that are going to benefit the most from your expertise, and pricing yourself accordingly. Okay, that's enough for today. I'm Jonathan Stark, and this is Ditching Hourly. Thanks for listening. The next time someone asks you for your hourly rate, I want you to go to valuepricingbootcamp.com to sign up for my free email course. Again, that URL is valuepricingbootcamp.com. 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

is jonathanstark.com/call. Hope to see you there.