I use the word value for a specific reason. In my editorial biz, the tradition is to charge for time (by the hour), although I’m seeing a growing trend toward charging by the page or for the whole project. 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 time is only one aspect of it.
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. I think many of us who provide support services for creative projects like writing, or who provide coaching, etc., are not taking into account the potential value of our talent and skill. We are just thinking in terms of the time it takes. 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 the partnership). That’s how many products are priced, but not so much with services. I believe that folks who need my editorial services usually have a budget or idea of what they can invest in publishing. I think the customer is better off if they don’t pay me just for my time. In my view, 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 fee to reflect that talent and knowledge, and also whatever time it takes me to get a certain type of job done. But you see, it’s all three things, not just the time.
I’m really committed now to maintaining my value pricing model for all the services I provide and not focus on being paid for time. It’s better for the customer because they know what to expect, and it’s better in the long run for me because if I structure my fees correctly, I will also be paid for my talent and skill.
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 is the only daily blogger that I read faithfully. He’s also a WordPress geek, which is good for me and maybe not your thing, 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). Highly recommended 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.