HOW TO MAKE HOURLY PRICING WORK - HOW Design Live 2015

Let's face it—most of us who run creative shops did not study business. We just love making things, so we started companies where we could create on our own terms. Unfortunately, being a great maker does not necessarily equip us to make sound business decisions. For instance, how should you price your work?

In this session, Sparkbox’s Ron Harr will discuss differing pricing strategies, covering the pros and cons for each. While there’s no one right answer, he’ll show how hourly pricing has served Sparkbox well, and share advice on how to make hourly pricing work for other creative businesses. Any dedicated person should be able to run a profitable business, and figuring out pricing is a big step in that direction.

3 Main Take-Aways:
1. Knowing where and how to negotiate terms with larger clients
2. Avoiding common pricing pitfalls
3. Making hourly pricing work for your creative business

Transcript

1. Rob Harr HOW TO MAKE HOURLY PRICING WORK @robertharr
2. HELLO!
3. I AM NOT A LAWYER! This is really small print that Rob Harr is not a lawyer. All of the things that he says should be checked with an actual lawyer who know what the heck they are doing. This is not a time that I would suggest that you “Better call Saul”.
5. Let’s talk about money.
6. HOW TO MAKE HOURLY PRICING WORK HUMBLE BEGINNINGS
7. FORGE
8. Failure?
12. HOW TO MAKE HOURLY PRICING WORK PRICING OVERVIEW
13. We are bad at pricing.
14. Starting a business. TAN GEN T!
15. Our Craft What we believe. Business TAN GEN T!
16. Our Craft The Truth. Business TAN GEN T!
17. Fixed Pricing
18. Value Pricing
19. Hourly Pricing
20. There is no right answer!
21. You have to be intentional.
23. Communication is the most important part of making any pricing model work.
24. Why Projects Fail. TAN GEN T!
25. Focus on adding value.
26. Freedom is not free.
28. HOW TO MAKE HOURLY PRICING WORK MAKING HOURLY PRICING WORK
29. Calculating your hourly rate.
30. Our Fake Team $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Rate
31. Pricing Multipliers TAN GEN T!
32. 2x 3x 4x Pricing Multipliers Hourly rate: $25 $50 $75 $100 TAN GEN T!
33. 3x 4x Pricing Multipliers Hourly rate: $25 $75 $100 TAN GEN T!
34. Our Fake Team - Individual rates - 4x $84 $152 $192 $112 Bill Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Rate
35. Blended Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Rate $33.75 Average 
 Hourly Rate 4x Multiplier $135 Bill Rate Our Fake Team
36. Value Hourly Rate $45k $80k $100k $60k Salary $21 $38 $48 $28 Hourly Rate $33.75 Average 
 Hourly Rate ? Fuzzy Math $150 Bill Rate Our Fake Team
37. 20% 5% 6% 11% 58% Your Budget 58% Compensation 11% General + Admin 6% Rent 5% Advertising 20% Net Margin
38. 20% 5% 6% 11% 58% Your Budget 58% Compensation
39. Prototype your rates.
40. Hours per week?
42. What gets measured gets done. TAN GEN T!
43. It is all about cash flow.
44. Weekly invoices
45. Know your terms.
46. Not all hours are created equally.
47. Regression to the mean.
48. Production : $175 Consulting : $250
49. Initial Engagements
50. Work for hire.
51. Collaborative Pricing
53. 20% Deposit
54. HOW TO MAKE HOURLY PRICING WORK SOME GOOD IDEAS
55. Get a line of credit before you need it.
56. Get professional help!
57. Find some owner friends.
58. Train your clients to think about your pricing model.
59. Have difficult conversations.
60. Track your time.
61. Find better clients.
62. Sell to your existing clients.
63. Sell to your existing clients. Or… Be a good partner.
64. Save your cash.
66. HOW TO MAKE HOURLY PRICING WORK WRAP IT UP
67. Common hourly billing criticisms.
68. There are no shortcuts.
69. No one should be able to 
 dictate the terms in which you do business.
70. Rob’s two basic rules for happiness in business:
71. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:
    
72. If you ever become annoyed by a client, it is only because you’re not charging them enough money. Life is too short to work with people you hate. Rob’s two basic rules for happiness in business: Rule 1:
    Rule 2:
    
73. The real secret to what little success we have had at Sparkbox.
74. Confidence The real secret to what little success we have had at Sparkbox.
75. Want more? Businessology Podcast BizCraft Podcast
76. THANKS! @robertharr rob@heysparkbox.com