What Exactly Are You Selling?

Are you cheating yourself by pricing by the hour? This article, from the forthcoming “The Designer’s Guide to Marketing and Pricing” by Ilise Benun and Peleg Top, will explain exactly what you’re selling – and it’s not your time!

Written Jan 13, 2008, read 796 times since then.

Independent professionals spend an inordinate amount of time fretting over how much to charge. But there is no right or wrong answer when it comes to pricing. It’s all completely subjective and dependent on a wide variety of factors, including what the market will bear, geographic location, timing, aggravation factor (or lack thereof) and your level of desperation (hopefully low to non-existent), just to name a few.

If you are selling your services, one of the things that often get in the way of clear pricing is the belief that what you charge is related to your value as a person. Wrong! It has nothing to do with you.

For example, a client will often ask, “How much do you charge for a web site?” or “How much do you charge for a brochure?” They ask these questions as if they are buying shoes or tomatoes.

In fact, if you were selling shoes and a customer asked, “How much do you charge for these shoes?” you wouldn’t say, “I charge $100 for these shoes.” You would say, “These shoes cost $100.”

It’s the same with creative or professional services. It has nothing to do with what “you charge.” It’s not about you, and it never will be. You must shift your mindset to think instead about what the product and the process costs. So when someone says, “How much do you charge for a web site?” take the “you” out of it and respond with, “A web site can cost $X.”

Clear pricing is based on a clear idea of what you are really selling. You may believe that what you are selling – and what clients are buying – is time. As a result, you price by the hour.

Pricing your services by the hour is easy. It’s clean, it’s orderly and it doesn’t require much math. But when you price by the hour, you are cheating yourself, especially in the long run.

You get better at what you do—sometimes a lot better—with time. A 10-page brochure might take you five hours today when, two years ago, it may have taken twenty. But if you charge by the hour, as you get better and spend less time, you will earn less instead of more. Does that make sense?

Also, yours is probably a creative process. Not only is there no standard for how long it should take; there is a lot of “creativity” and inspiration involved. You have no idea how long it will take for your best ideas to come. They could take several hours of doodling and thinking and whatever you do for inspiration; or they could come right away. Should you be paid based on how long it takes for your ideas to gel? Is that how you should determine how much money you earn?

The answer, of course, is no. Because you are not selling your time. What you are selling is your years of experience, the effort you’ve expended developing your skills and talents, and your resulting expertise.

What you are selling is your brain, your attention and your creative imagination applied to a client’s specific problem, and that has a value. It’s not an objective value; in fact, it’s highly subjective, which makes it challenging to quantify.

Ultimately, what you are selling is peace of mind. You see, your clients may not understand exactly what you do. They don’t know what they’re buying, and they know they don’t know. So it’s your job to make them comfortable and safe in the knowledge that you do understand and will take care of everything. If you do that, the good clients will choose you, even if you’re the highest bidder.

Learn more about the author, Ilise Benun.

Comment on this article

Posted by Rachel Whalley, Seattle, Washington | Jan 17, 2008

I see how this applies to businesses that provide a commodity at the end of the service. But I don't see any way around charging per hour when what I am literally selling is my time as a healer/listener/therapist. Do you have any thoughts on that?

Your body and spirit have something to tell you...
Posted by Ilise Benun, Hoboken, New Jersey | Jan 18, 2008

Rachel, no, I agree with you and, as a "Marketing Mentor" (i.e. consultant), I also charge by the hour.

But one alternative is to offer a "package" whereby a client gets a certain number of hours for a set price. I find that makes it easier to wrap their heads around sometimes and takes out some of the "how long will this go on for?" uncertainty. Have you ever tried that?
Posted by Lara Harris, Wenatchee, Washington | Jan 18, 2008

@Rachel Whalley-- you could charge per session. sessions can be of differing lengths or types and have a set pricing structure.

Thank you, Ilise; I love it when someone opens my mind to a new way of seeing things. Perhaps this sounds goofy but I feel a bit liberated!
Posted by Katalin Goencz, Stamford, Connecticut | Jan 19, 2008

How do I sign up for your newsletter?
Posted by Rachel Whalley, Seattle, Washington | Jan 20, 2008

I have in the past offered packages with my previous business as a writing coach--no one ever went for them. Now, it's possible they were not well designed...I obviously don't have perspective on that, since I designed them. :)

For my practice now, I specialize in very short term therapy -- 1 to 3 sessions, usually, and I state that in my website and during my consultations with potential clients. Therefore there's little need for offering a package with my work.

I have had a client or two ask me to setup a package with them specifically because they wanted to ensure their own accountability to a number of sessions. I was happy to do that with them in those cases.

Since my clients are such resourceful, smart and motivated people, I rely on them to tell me (either indirectly or explicitly) what will work best for them.

Your body and spirit have something to tell you...
Posted by Emma McCreary, Portland, Oregon | Jan 25, 2008

Rachel, I'm a smart, resourceful, motivated person, but if I were coming to you I might want to be offered that I had the option to sign up for several sessions at once--sometimes people are smart but they don't think of options and if you offer them they might go for it. Sometimes it just wouldn't have occurred to them. Sometimes good marketing is about guessing peoples possible needs and giving them those options.
Posted by Mary McKitrick, Florence, Massachusetts | Jan 25, 2008

This is such an important idea for those of us selling services! Since I'm a voice-over artist and often "sell" 30 second commercials, I have heard some interesting ways of thinking about pricing, mostly from colleagues who are trying to justify accepting a low bid for a commercial voice-over by thinking of it in terms of an hourly rate. It isn't even possible to do an hour's worth of 30-second commercials in a day (that's 120 commercials, each of which has to be discussed with the client, scripts are often revised, the read has to be approved, sometimes re-done.... each recording requires editing, time to upload, and so on)! My rates are based on the skills I'm offering and the years it took me to develop them. I finally made a list of all the ingredients that go into developing a voice-over business and came up with this:

http://mcmvoices.com/blog/2008/01/setting-rates-in-voice-over-business.html

as well as this:

http://mcmvoices.com/blog/2008/01/perceived-value-in-voice-over.html

Probably every business owner can come up with a comparable list.

Thanks for this post Ilise! It's right on the mark.
Posted by Sherri Schultz, San Francisco, California | Jan 27, 2008

@Mary:

Thanks so much for sharing your very thoughtful blog post! I'm sure other freelancers will find it fascinating, as will people hoping to break into your field. As a print editor, I had no idea what goes into voiceovers; I'm in awe!

Now we need a similar post for people who think it would be cool to "get paid to read books..."

And thanks, Ilise, for the original article--definitely lots of food for thought there.
Posted by Chris Radant, Seattle, Washington | Jan 29, 2008

Ilise- I appreciate what you're saying. I'm a Senior Copywriter/Marketing Strategist, and am also forced (by industry standards and the need for clarity to my clients) to use hours as a fee structure. I always have to make sure I don't penalize myself for being fast (since I'm so experienced.) It's all tricky business. My clients always get a deal, whether the know it or not in the end. I make sure of it.

I'm also an artist, and fairly often, I get the question, "How long did that painting take you to do?" And my reply is "36 years", since that's how long I've been doggedly studying, practicing, failing, learning, etc. to get to the place I now am as a painter.

Neither tactic is perfect, but at least with a painting, customers can evaluate what they're buying. With my writing projects, I can see why they need to know what they're in for.

Great topic. Very helpful!

Chris Radant
Posted by Corrina Steward, Somerville, Massachusetts | Feb 20, 2008

What would any of you suggest for setting prices for someone like myself who's just getting started? I am pretty clear about my coaching rates, because the peers in my industry are quite transparent about that and I've gotten a lot of good advice there.

But on the consulting side of things, I'm pretty foggy about where to begin. I have an idea of what I'm worth per hour. But I love the idea of charging by the project/service. How would you prioritize these services in terms of most and least valuable: research/analysis, offering advice and developing programs (i.e., strategic planning, developing framework, etc.). Any thoughts on to how to think about this? Especially from the packaging stand point?
Posted by Judy Dunn, Renton, Washington | Feb 25, 2008

When we provided copywriting and graphic design services with our first company (which is still in existence), the "How much is your hourly rate?" question was the first one out of a prospective client's mouth.

You are right, Ilese. It's a trap. If you say $100 an hour, immediately that little cash register in their head begins to go cha-ching, cha-ching. You can just see it in the their eyes: If it takes 10 hours, that's $1,000. But what if it's 20 hours? $2,000! Oh, my! What if it takes 50 hours. $5,000! And so on and so on.

After several years, we got good at estimating how long it would take and started offering flat fee pricing, within very specific parameters (rough draft, up to two revisions, and final draft, for example) to cover us in cases where the client changed his entire vision midstream. Sure, we lost on some projects (very few) by underestimating, but most of the time it worked.

This won't work in all fields, but it seemed to be a good pricing strategy for us.

Online Marketing Resources for Solopreneurs
Posted by Leslie Sierra, Seattle, Washington | May 15, 2008

Ilise, (back to just the article) extremely well said! While I have not fallen into this trap, I have struggled w/how to explain this to clients. Now I know. thank you! I really enjoy reading your posts. You find a way to articulate the jumble in my head. thank you!