Wed, 10 October 2018
Is billing a headache for your marketing agency? Do you wish you could quit hour-based pricing and actually get paid what you're worth? Good news! You can. By removing the time barrier, you will see increased profitability and improve client relationships for your agency.
In this episode, we'll cover:
Today, I talked with Mike McDerment, co-founder and CEO of FreshBooks — invoicing and accounting software with over 24 million users. Mike talked about his recent free eBook called Breaking the Time Barrier and why agencies need to drop time-based billing and start to use a more value-centric model.
3 Reasons To Bill by Value Instead of Time
Most agencies bill by-the-hour or by-the-project, but, time-based pricing may be doing your agency more harm than good. Mike explains 3 reasons value-based pricing is a better approach.
Value-based billing allows you to develop deeper relationships with your clients. Not only that, it gives you the ability to bill clients based on your deliverables, which benefits your agency since productivity isn't always consistent. And actually, with hour-based pricing, the smarter you get the more profit you lose.
What Does it Mean to Remove the Time Barrier?
Let me ask you a question. If you charge based on hours, are you selling a service with value or are you just selling hours?
For example, if your agency designs websites, what are you really doing? It depends on the client. Some clients want a new site so they can increase their conversions, right? Wouldn't it make more sense to sell them a website that increases conversions? The difference between billing by the hour and billing by the value of your service can seem like they're the same thing - but they are not!
Let's say it takes you 5 hours to design that website and it starts increasing the client's conversions immediately. Great! But, if you billed them at $60 an hour, you've only made $300. Is that really enough for improving a clients conversion rate by 4%? At the same time, if it took you 300 hours, your price may seem too high for the client.
Instead, sit the client down and figure out what they need. Once you understand their needs, you can bill them based on what you are delivering, not how many hours you worked.
There's no confusion at the end of the project, no combatting over hours, and you and the client will feel better about the end product. No one feels like they got the better of the other party. That's what removing the time barrier is all about.
Direct download: How_to_Break_the_Time_Barrier_So_You_Can_Increase_Agency_Profit.mp3
Category:general -- posted at: 7:00am EDT