Recently, I had a client who left their corporate job and embarked on a solo consulting journey. Among the many financial considerations that come with venturing into self-employment, an interesting question arose: should they charge by the hour or by the project?
At first glance, billing by the hour may seem like the most straightforward approach. It provides a clear structure, compensating you for every moment you invest. However, this method can inadvertently introduce some less-than-ideal motivations into your work.
For instance, when the primary focus is on time spent, it can divert everyone’s attention from the true impact you and your client seek to make. This is often the most challenging yet pivotal aspect of service work. Instead of asking yourself, “How can I bring about this transformation?” you might find yourself pondering, “How can I utilize X hours to achieve this?” Consequently, you might end up prioritizing appearing busy over delivering exceptional results – a situation that neither benefits your client, who relies on your expertise, nor fosters your professional growth.
On top of that, the hourly billing model may encourage more extensive communication with your client than necessary to demonstrate that you are diligently working and making the hours count. This can become a time-consuming distraction from the core value you aim to provide.
On the other hand, shifting your initial discussions towards a deeper exploration of your client’s genuine needs and what it will take to fulfill those objectives without the looming pressure of tracking hours opens the door to a more harmonious collaboration. Both you and your client can focus solely on the value you bring to the table.
In this context, you may discover more effective and efficient methods to accomplish your tasks, driven by the desire to complete the project quickly, as compensation remains unaffected. This arrangement benefits everyone involved – your client gets results faster, and you have the potential to take on more projects, increasing your overall income.
Even if you don’t finish a project within a shorter timeframe than you would if billing hourly, you won’t be tempted to fixate on the hours spent. This, in turn, helps you build stronger trust with your clients, enhancing your reputation and accelerating the growth of your business.
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