As freelancers, many of us fall into the trap of selling our time instead of our expertise. Time-based billing is a long-standing practice, but it often undermines the true value of our work. In this guide, I’ll break down why it’s time to rethink this model and how you can transition to pricing based on expertise and results.
Why Selling Time Doesn’t Work
Think about this: you’re hired to solve a complex problem. Because of your experience, you solve it in a few hours. Under a time-based model, you’re only compensated for those few hours, even if your work saves the client days or even weeks of effort. This system rewards inefficiency—freelancers who take longer might earn more than those who can deliver quickly and effectively.
Here’s what’s wrong with this approach:
- Time is a poor measure of value: Clients care about outcomes, not how long you spend achieving them.
- Efficiency gets penalized: The faster you get things done, the less you earn.
- It creates friction: Clients may start scrutinizing how you spend your time rather than focusing on the results.
What You’re Really Selling: Expertise and Impact
Clients hire freelance software engineers and developers for their expertise, not just for their labor. Your value lies in the knowledge and experience you bring to the table—the ability to diagnose issues quickly, provide strategic insights, and deliver high-quality results. This is what clients are really paying for, and your pricing model should reflect that.
Here’s what you’re offering:
Experience: You’ve seen similar problems before and know how to tackle them.
Strategic Thinking: You can spot opportunities and risks that others might miss.
Efficiency: Years of expertise allow you to work faster and smarter.
Transitioning to Expertise-Based Pricing
Making the shift from hourly billing to expertise-based pricing involves rethinking how you structure your services. Here are a few models to consider:
Project-Based Pricing: Charge a flat fee for the entire scope of work, with clear deliverables and timelines.
Retainers: Offer ongoing access to your expertise through a monthly or quarterly fee.
Value-Based Pricing: Set prices based on the value or impact your work delivers to the client.
These models align your incentives with your clients’ goals. Instead of being measured by time, you’re measured by results.
Addressing Client Concerns
Some clients may be hesitant to move away from time-based billing. They might raise questions like:
"How do I know I’m getting enough for my money?"
"What if the project takes longer than expected?"
"We have budget constraints and need detailed cost breakdowns."
To overcome these concerns, transparency is key. Here’s how to build trust with clients:
Define clear deliverables and milestones: Let clients know exactly what they’ll get and when. A good contract that covers that is worth its weight in gold. Be very precise what's included and what is not.
Provide regular progress updates: Keep clients informed without needing to clock hours. You might use a tool like Clockify for your own internal auditing, but, if you put yourself on a regular schedule to update clients, in writing, and in a single location that's easy for you to update and for the client to access, you'll be way ahead of the game. Regular communication is key, and stick to a single channel.
Be upfront about scope and pricing: Ensure clients understand the full value of your work. Can you express it in terms of how much time it will save them, how much more profitable they can be? It's worth doing this homework so you have solid conversational points that realistically convey the value of your skills.
By focusing on outcomes rather than hours, you’ll foster stronger client relationships and deliver more impactful work.
Benefits for Freelancers
Transitioning to expertise-based pricing can transform your freelance business. Here’s what you stand to gain:
Higher Earnings: Your expertise commands a premium, especially when you deliver results quickly.
More Flexibility: Without the need to track hours, you can work on your own schedule.
Improved Client Relationships: Clients appreciate transparency and value-driven results.
Final Thoughts
Freelancers, it’s time to stop underselling yourselves. Your value isn’t in the hours you spend but in the expertise and impact you provide. By shifting to expertise-based pricing, you’ll position yourself as a trusted advisor and unlock new opportunities for growth.
Have you made the shift away from hourly billing? What’s worked (or not worked) for you? Share your experiences in the comments—let’s help each other build better, more sustainable freelance businesses.
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Hello, I’m Janet Greco. By night, I post on dev.to with the aim of empowering technology geniuses with the tools they need for global success. By day, I run Broadcast Projects, a business communication consultancy for industry professionals, where I help drive sales with customized market outreach for media and entertainment technology brands.
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I for one could never understand how duration based prices work. Outsiders spread word that nomadic lifestyle can cut cost, but equipment and online services cost in the technology industry don't really translate well to such interpretation of costing from businesses more prevalent from the times of older generations. Second, as a freelancer, switching between clients computer software development specifications from frontend coding to API implementation implies blurring the line separating work from self development, so how to agree what is paid and what is time investment on my own expense. This is especially significant as unlike monotonosity of long term employment, I've to be flexible to keep switching between variety for avoiding conflicting dates. Third, even for the employed, in the work hour there are snack breaks, office grapevine talk between meetings, politics, despite entire office timing being counted as working time. When considering time zone based surveillance and tracking based remote work, it bothers me how can I be in front of camera, when say UpWork app wants a photo of me working, if I 've to use the restroom for just 2 minutes. & unlike blue collar quantifiable work, or devices like TV running for hours, is it realistic to be generating code at some predefined pace for 8 hour shift with only meal break?