HOW TO MAKE HOURLY PRICING WORK - HOW Design Live 2015

7a6f8abf3af4af2ab8720782b06c9d77?s=47 Rob
May 04, 2015

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

7a6f8abf3af4af2ab8720782b06c9d77?s=128

Rob

May 04, 2015
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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”.
  4. None
  5. Let’s talk about money.

  6. HOW TO MAKE HOURLY PRICING WORK HUMBLE BEGINNINGS

  7. FORGE

  8. Failure?

  9. None
  10. None
  11. None
  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.

  22. None
  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.

  27. None
  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?

  41. 32

  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

  52. None
  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.

  65. None
  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