Charging your clients per hour you spent creating the strategies, implementing ideas, and carrying out the project is absolutely the worst way to charge for services, especially in marketing, public relations, consulting, design, development and other creative industries.
You are practically selling your hours and giving your best asset for free—your knowledge and expertise.
Let me give you a simple example. I was helping one partner to establish a business model for his startup advertising agency.
- personnel organization and onboarding
- sales funnel and client acquisition process
- service placement and “product packaging”
- pricing strategy
- necessary financial investments to start a business
The results were:
- smooth education and onboarding process for contractors
- precise and properly organized client acquisition/onboarding process
- service scope, “packaging”, and pricing policy established
- overall initial financial investment reduced by 70% from a defined and expected budget
- with two contractors, the client in the initial three months had a turnover (service only) of $96,000
- the profit margin on that turnover when all costs were deducted was 85%, or $81,600
- invested 40 hours overall in this setup
- hourly Scenario: Let˙s say you charge a consulting fee of $150 per hour – meaning you would receive $6,000 for this engagement
- the path I advocate: result-driven approach according to created value; much more profitable