I was cruising along in my freelance business until I read the book Breaking the Time Barrier. It rocked me. I wondered: have I been leaving money on the table all along?
Breaking the Time Barrier discusses how freelancers price services. I had always heard a lot about the two primary ways to get paid as a freelancer: hourly or flat rate (and had already declared project rates to be the clear winner). But Breaking the Time Barrier presented a third, previously unknown option: value-based pricing. I was shocked by what I learned.
This concept is explored in Breaking the Time Barrier using an interesting fictional story with many valuable lessons.
A freelancing parable
Breaking the Time Barrier tells the story of a fictional freelance designer named “Steve.” Steve is a semi-successful freelance designer who has plenty of clients and has worked with a few big clients. But Steve is overworked. He’s also watched a company he’s freelanced for go on to great financial success while being stuck working for them at his meager hourly rate.
Steve has gone through the struggle I and many other freelancers have: our time and available hours we can bill is finite. And competing on price means we’re stuck. Like many of us, Steve wonders if there’s more.
Then Steve meets Karen, who doesn’t work for hourly rates or even the flat project rates (or at least not flat rates as most of us know them). Karen charges clients based on value–typically a percentage of the overall revenue increase her clients can expect to receive from her work. Karen explains:
They don’t hire me to design a website for the sake of designing a website. They hire me to design a website that’s going to help them grow their business. I find when I look at it like that— from their perspective—it’s clear I’m not selling time. Instead, I’m selling a solution that is going to make an impact for my client and achieve some business objective.
Karen’s tactic isn’t a money grab, but a carefully constructed strategy she uses when she meets with potential clients and writes project proposals for them. The result: Karen gets paid multiples of what Steve earns for similar projects. At the same time, Karen’s clients benefit from her expertise beyond the role of just a freelancer.
Talking with clients
A lot of Karen’s strategy has to do with how she approaches clients. She doesn’t merely jack up her rates just because. She uses a strategy to understand their needs and the potential benefits she provides, and then prices her services accordingly. A few keys parts include:
- She doesn’t start with price. Karen knows potential clients shopping on price alone aren’t her ideal targets. Instead, she asks questions and explores her clients’ needs first.
- She asks clients what their desires are. Clients may say they want a new website, but what they really want is more sales. Karen makes sure to get to the bottom of this.
- She explores work outside the clients’ proposed scope. Once Karen knows her potential clients’ desires, she offers a solution to meet these needs rather than simply submitting a proposal based on the limited work they originally asked for.
The key here is to think about what you can do differently to stand out, find out what clients really want, and offer them a solution that helps them meet their goals, while proposing a fee that’s in-line with each of these items.
It’s about ideas, not just the work
One trap freelancers fall into: believing clients are just hiring you for your time. There’s actually much more to it. As Karen puts it:
I’m the accumulation of all my skills and talents. I’m wisdom and creativity. I’ve stopped seeing myself as a punch card. My clients don’t see me that way either. Yes, sometimes, I’ve had to change my client’s mind-set. But it starts with me first, just as it starts with you.
Don’t forget: clients are hiring you for your skills, experience, and expertise. These things take years to develop, and they don’t simply translate into the few hours you put into client work.
Value-based pricing really isn’t revolutionary
Even though this idea of pricing on value hit me hard, the book points out it’s nothing new, nor unique to creative freelancers.
Karen mentions a story of how a plumber she hired to make an emergency call to her home charged her $300 for about 10 minutes worth of work. And she didn’t complain or think he should charge less. The plumber offers a valued service and charges a premium fee for his work, and that work is valued by homeowners who need a fast solution to their plumbing problem.
This is where the key for freelancers lies: Don’t charge based on value just because you simply want to make more money from your clients. Offer more value to clients in the form of specialized service that makes you stand out above your competition. This way, you’re certainly not competing on price alone and can justify higher fees when clients see the value you bring.
Getting started with value pricing
Breaking the Time Barrier is honest: you can’t 100% make the leap to value-based pricing tomorrow. The book ends with Steve gradually making the transition until, months later, he finally lands a huge client at a lucrative rate and pushes his salary into six-figures.
But you can get started tomorrow. The book invites you to think about how you can offer more to your clients and in turn command higher fees by providing greater value.
I highly suggest checking out Breaking the Time Barrier, which is available as a free download.
Have you tried a value-based pricing model for your freelance services? Why or why not?