Anyone who has worked with me for any amount of time has probably heard me say “people don’t want three-quarter-inch drill bits, they want three-quarter-inch holes.” It’s a personal mantra that I can’t actually take personal credit for (I read it somewhere years ago and it was seared into my brain). I love it and live by it because I feel that it perfectly sums up the idea that people don’t purchase something because they want a specific product or service, they purchase it because they want the outcome—how it makes them feel, how it solves a problem they’re having or how it makes their lives better.

So, what does it have to do with how we charge for our work?

Everything.

Let’s be honest, nobody really wants to purchase an hour of our time (and they don’t want to purchase a marketing plan, news release, brochure or logo either). What they really want are results. They want to attract attention, engage audiences, develop relationships and move their customers through the purchase cycle.

However, decades of experience as consumers has trained us to think in terms of how many hours something will take and how much we’ll be billed per hour.

It’s a method of doing business that, when you really stop to think about it, doesn’t make a whole lot of sense.

The case against billing by the hour

Beyond the fact that you really don’t want to buy our time, there are several other reasons why billing by the hour doesn’t work in your best interest or ours.

1. Not all hours are created equal.
   Making a simple copy change in a Word document doesn’t require the same amount of effort as it does to develop a year-long marketing strategy—nor does it have the same impact on your business. Therefore, we don’t really think you should be charged the same. To us, doing so would kind of be like a doctor charging the same to remove a brain tumor as he or she would to take your blood pressure.
   
2. It takes focus off of the end goal.
   If you know every phone call, every meeting and every revision is going to cost you, at some point you’ll end up settling for “good enough.” We don’t believe you really want “good enough,” we believe you want to get it right and meet your objectives.
   
3. It’s at odds with productivity and efficiency.
   Not only do you want to get it right, you want to get it fast (or at least as fast as possible). However, people who bill by the hour are not incentivized to get things done as quickly or as efficiently as possible. All of those changes and revisions simply mean more money in their pockets.

Project-based billing

To help ensure the best end product and avoid “meter watching” on either side, we prefer to bill by the project. This method entails us working closely with our clients to determine a clear set of objectives and an overall scope. Once agreed upon, we then develop an estimate for the entire project.

Several factors play into how we come up with our estimates, including how long we think the project “should” take and how much we would pay someone else to do it (if we did … but we don’t) based on the level of complexity. We also try to figure in any potential overheard or expenses that may be involved in the project to avoid any surprises down the line.

Other people who use a similar method sometimes call it “value-base billing” because it looks at the project as a whole and determines a cost based on the overall value to the end user rather than basing it on individual components like hours.

All of that said, if a client still prefers to work with us on an hour-by-hour basis, we’re happy to do so, we pride ourselves on our flexibility and willingness to do whatever it takes to meet a client’s objects.

Have questions or want to learn more? Please leave a comment or contact us.