While Troy is away in London, Simon and Ben take this opportunity to talk about how to get yourself off of the hourly rate treadmill. After you watch the episode, check out the recap below to find two templates you’ll be able to use to make this transition much easier for yourself and your clients.
Watch the Video
Why You Need to Ditch the Hourly Rate (4:00)
Although it didn’t get an official mention in this episode, “Thou Shalt Ditch the Hourly Rate” is Commandment #5 of Freelancing. If you’d like to see the next video in the Commandments series, give this one a gander:
Now, why do Simon and Ben (and Troy) care if you’re still chugging along on the hourly rate treadmill? There are a number of reasons why it’s bad for business:
- An hourly rate is an arbitrary number that conveys no value whatsoever; its sole focus is on the time you spend on a project.
- It doesn’t say anything about the outcomes you’re going to achieve.
- It puts a cap on how many clients you can help.
- It keeps revenue and profit margins unpredictable.
- It’s not scalable.
- It prevents you from being able to plan ahead. Instead, you’re constantly working as a reaction to something instead of proactively towards a goal.
- It leads to inefficient workflows.
If your goal is to actually achieve something valuable for your clients, an hourly rate will keep you from doing that.
Picasso’s Napkin (8:30)
There’s a tendency with WordPress professionals to feel guilty or insecure about selling packaged services instead of charging an hourly rate. Don’t.
There’s a story about Pablo Picasso sitting in a restaurant when he’s approached by a woman who asks him to sketch something on a napkin for her. In 30 seconds, he produces his drawing and states that it’s $100,000. Then, she objects:
“But it only took you 30 seconds!”
And his response?
“No, it took me 40 years.”
While you might not be on the same level as Picasso, the skills you have are remarkably greater than what your clients could ever achieve if they tried to do it on their own or if they chose to work with an amateur.
You’ve worked hard to build a process, hire a team and implement a system that guarantees certain outcomes for your clients. As such, it shouldn’t matter if it takes you hours, weeks or months to build their website. You should be paid for what you’re capable of doing; not for the time you put into it.
The Golden Nugget (11:20)
There’s a great story from Jasmine Andrews about how she realised the value of becoming her clients’ strategist instead of someone who simply handles implementation. If you want to hear her tell it, check out The 7 Stages of Professional Growth.
Tools of the Week
There are two templates you should be using in your journey away from charging an hourly rate.
The Trello Yearly Planning Template (13:40)
As Simon explains, he was stuck on the hourly rate treadmill with a former client. They would send random requests that he and his team would have to drop everything for. The projects were difficult to manage, unpredictable and created uncomfortable peaks and valleys in the agency’s revenue.
To improve their ability to handle these tasks, Simon helped the client plan out their year — since it was clear they weren’t working proactively towards any achievable goals. And he did this using a Trello board template.
You can watch Simon walk through what it is and how it works here:
Then, go to Trello and copy the template for your own purposes.
Download the Trello Yearly Planning Template.
Remember: the goal is to be seen as a trusted adviser; not someone merely trying to sell them on a yearly plan. This tool will give you that authoritative edge.
The Profit Margin Analysis Template (20:25)
Another tool you’re going to need in your arsenal is the profit margin analysis template.
With this spreadsheet template, you can more easily calculate profit margins.
This isn’t just about seeing the numbers in front of you. This is about truly knowing your numbers and then using that data to figure out why a project took so long, which parts of your process really work and how to strengthen workflows so you can grow those profit margins in the future.
Let’s Get Unstuck
The first person stuck is Siddarth Jashnani at the 25:25-mark:
Simon suggests taking the first step. However, rather than just send over the worksheet straight away, get a little conversation started and establish a rapport before asking them to commit to a task.
At the 27:35-mark, Jessica Gruber asks:
Really, this depends on what you actually intend on selling. That said, Simon suggests that Jessica (and others in her position) get more niche than that while also taking the focus off of their agency. Instead, frame your solution from the point-of-view of the client and what they want.
For those of you currently charging an hourly rate for your WordPress services, I hope you were able to walk away from this episode with more confidence and clarity about what you can do going forward.
This isn’t just about growing your profit margins (though that will happen as a result regardless). This is also about creating a business that you feel secure in, that you’re not constantly wondering how much money you’re making and whether you have enough to survive. By charging a flat fee, you’ll give your WordPress business the ability to thrive.
If you have questions about profitability you want to share with the team at WP Elevation as well as your fellow WordPress professionals, join the Digital Mavericks group on Facebook. Request to join here.
Also, don’t forget about WP Elevation’s free online course where you’ll learn how to charge higher fees and get better projects and clients in the process. Get Instant Access here.