Selling Expertise Not Hours Of Work
I thought it will take you a couple of minutes to do this. Why should I pay thousands of dollars for just 10 minutes of your work?
In this post, I'm going to go through the personal experience I had working with clients on an hourly basis as a designer. Also, some of the key principles and conclusions I came up with.
Charging by an hour is easy and does not require lots of calculations. However, this is not the most efficient way of work both for you and your clients. Let me explain.
One of My First Freelance Experiences
I remember that time when I stepped into the freelance game and found my first design projects in a local agency. The point is that they've outsourced the design work they couldn't do in-house basically because they didn't have enough guys to handle it. The easiest way for us to organize the financial part of our agreement was to define the hourly rate and we agreed that I'll send the hours spent on a project after the completion.
As I mentioned before, I was a newbie at that time, and to put it simply this agency defined the hourly rate for me and I decided to just go by the flow and see what happens next.
I must say that was a super low $10 per hour rate at that time, but I decided to take it and learn from my mistakes instead of spending time on anything else. Practice makes you learn fast.
I didn't know much about the freelance business since I was working in a company and things are pretty much different there. In short, corporate life is way more organized.
So pretty much I somehow had to organize my time and work. All the creative solutions were up to me as well. Even so, I was provided with some guidance I was in charge of bits and pieces of UX, icons, UI, and technical parts like handing off the design to developers.
We had arguments about the time I spent on the work and perhaps they just saw me as a resource and ways of reducing their costs being time efficient at the same time. So they can profit more from these projects. The main focus was on the time I spent and deliverables. Nobody talked about the value or even close to it.
Long story short, I wouldn't say it was a positive experience, but I must say it was an experience. I've learned a lot working with this agency.
The main takeaway from this experience is that you shouldn't position yourself as a resource under any circumstances.
In the best-case scenario, you're not just selling your time if you're professional or at least have some experience in something. Most of the time, you create value if you do some kind of commercial activity. And the time you spend on it matters less.
Olympian champions don't just participate a couple of hours or one day in a challenge. They put in themselves years and years of hard training. Professional boxers don’t fight for one hour and paid millions for just this hour. So, consultants, designers, developers, writers, and similar guys shouldn’t be paid by the hour.
The problem with Value-based pricing
Oftentimes, we can't see or understand the value of results we're going to create. That's is the hard part and perhaps a topic for a separate post. What I want to say here is that sometimes it's impossible to say that your prices are value-based and you don't see any other way to do business with clients.
Sometimes, the truth lays in between.
One of the issues is that it's sometimes hard and time-consuming to evaluate your level of expertise or experience of somebody you want to hire.
What we can do is to check the background of a person, seek for testimonials, talk to the person and understand his thoughts on how he could help you or your business, see his portfolio of previous projects if it exists anywhere.
In my experience, oftentimes, clients don't always need something that they're requesting at first. They maybe saw something that competitors do or they have a shiny new thing syndrome. Anyhow, you can spend time doing the exact same thing that the client asks you to do or you can think about it and try to understand the value in it. Perhaps, they need to something else so this part of their business performs better.
Instead of selling your hours you can invest some time in your profile and build a portfolio to help your potential clients better understand the level of your knowledge and expertise. Unfortunately, this is something that we creatives struggle with even tho there are a lot of ready out of the package solutions to quickly build a decent portfolio or really any kind of portfolio.
The problem is not with tools. It's how we approach our activities and understand our net worth.
To make this concept simple let’s figure out what we sell. It doesn’t matter what specialty do you have. What matters is the amount of experience you have and often that this experience related to the problems you've already solved or value you created in the past.
Clearly, you'd go to someone experienced to fix your problem rather than somebody who has a label that he does that. That's a different level of trust and quite often a quality of the outcome.
If you want to sell your experience then you need to show it. Build a portfolio with examples of your work you did in the past. Of course, it’s a little bit different if you are a software engineer or, let’s say, a consultant. However, I believe everyone can build his portfolio no matter what kind of specialist you are. Maybe a blog is enough in your case.
I believe we need a place to share our thoughts and expertise with others. Not only a random place but a self-hosted site. Even tho it can be harder than posting on social media or other mediums.
Having your online profile or a portfolio is not the only thing but one of the main selling materials.
A portfolio is not all we need
I've had the experience of selling my service without showing a single work from my portfolio. And that was the case where I didn't my client as a person before. It was so random, but we just had a conversation and possible ways of making his interface efficient and pleasant to use. There were a lot of technical details, but basically, we just had 2 or 3 conversations before we signed up on this collaboration.
Charging per hour vs tracking hours
The fact that you decided to stop charging your client by the hour doesn't mean you can't track hours for your own good. Moreover, it can help you to simplify creating invoices.
First of all, tracking hours is useful for your business. And I'm a big proponent to do so, but internally. Basically, nobody needs to see the time stats that you spend on the work except you.
Now, how it can be helpful for you. Obviously, you can see where your time goes, which activities consume the most of your time, which activities less and you can better understand how it correlates with your priorities and goals.
In terms of invoicing, you basically, can count hours you spent on the work and take it as a base of the efforts you spent on a certain project or a part of a project. Even if you charge your clients upfront (invoice first, delivery afterward) you can understand how to better evaluate your next projects or milestones to be financially and time-efficient in the future.
As you can see the time knowledge is very useful, but for some reason, it was interpreted and used in the wrong way by a big part of the business world. Perhaps, back in the days, it was the easiest way to pay for labor work in factories similar entities, and technical (not really creative) activities.
I don't think it should be applied in the same in today's business world and especially the digital age. Soon freelancers will be paid for their work in crypto (I know the guy who does it already). Things change with lightning speed and we need to somehow adapt to it.
But lightning speed doesn't mean it's cheap and has less value. In fact, getting results fast is more valuable in the business world. So we better focus on the right things.