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A long time ago I came across an ebook from Sitepoint that talked about this very subject. Pricing per hour has the effect of placing a cap on your income: your

by byoung2 10y ago

A long time ago I came across an ebook from Sitepoint that talked about this very subject. Pricing per hour has the effect of placing a cap on your income: your hourly rate x the max hours you can bill in a year. Instead, you should bill based on the value to the client, in terms of increased revenue or decreased costs. For example, in 2007 I built an online appointment scheduler with real-time availability for a high end Beverly Hills hair salon. It took about 20 hours of work total. If I billed say $50 an hour I'd have $1000. Instead I sold them on the fact that they didn't need to hire a full time receptionist at $24k per year, and I was able to charge them $6000 for the project. They are still using this system today.

eberkund 10y ago
I have heard people advocate this before, and it makes sense until you ask yourself why should the business pay you $6000 for the project when they can hire (assuming similar competency) another developer to do the same thing for $1000? You aren't just competing with their existing solution, you are competing with other developers that they are likely collecting quotes from. IMO your ability to charge them $6000 was based more on them not knowing exactly how much work went into the project and not the value it saved the company.
- byoung2 10y ago
  why should the business pay you $6000 for the project when they can hire (assuming similar competency) another developer to do the same thing for $1000? This was also addressed in the ebook, and charging significantly more than your competitors is a strategy in itself. If they go with a competitor based on price, this is not a client I want (low end market ironically is more demanding than the high end). I get fewer clients, but still make more money than the cheaper guy (e.g. sell 1000 Bentleys or 20,000 Fords).
- byoung2 10y ago
  Also included in our contract was a money back guarantee and access to previous clients who agreed to be contacted for testimonials (we offered a discount if they agreed to let future customers contact them). We also met every client in person and bought them coffee, and submitted our proposal as a printed and bound brochure. These are all things that set us apart from offshore and other low cost providers.

by byoung2 10y ago

eberkund 10y ago

I have heard people advocate this before, and it makes sense until you ask yourself why should the business pay you $6000 for the project when they can hire (assuming similar competency) another developer to do the same thing for $1000? You aren't just competing with their existing solution, you are competing with other developers that they are likely collecting quotes from. IMO your ability to charge them $6000 was based more on them not knowing exactly how much work went into the project and not the value it saved the company.

byoung2 10y ago
why should the business pay you $6000 for the project when they can hire (assuming similar competency) another developer to do the same thing for $1000? This was also addressed in the ebook, and charging significantly more than your competitors is a strategy in itself. If they go with a competitor based on price, this is not a client I want (low end market ironically is more demanding than the high end). I get fewer clients, but still make more money than the cheaper guy (e.g. sell 1000 Bentleys or 20,000 Fords).
byoung2 10y ago
Also included in our contract was a money back guarantee and access to previous clients who agreed to be contacted for testimonials (we offered a discount if they agreed to let future customers contact them). We also met every client in person and bought them coffee, and submitted our proposal as a printed and bound brochure. These are all things that set us apart from offshore and other low cost providers.