Why We Don’t Bill by the Hour at Pathbrand
Almost all internet marketing agencies and web development companies advertise a standard hourly rate. It’s the easiest concept for most businesses to understand, because it’s the same way most company employees are typically paid:
Hours worked x hourly rate = Final Cost.
Simple? Absolutely. The best billing solution for agencies and their clients? Not really.
At Pathbrand, we approach creative work differently:
We don’t bill by the hour.
Wild, right? It’s not a new concept, by any means, and it’s not just for the sake of being different. Project and skill-based pricing actually is in the best interests of everyone involved, both Agency and Client. The estimate and pricing for everything we do, from websites to Google Ads, is based on the skill and complexity of each project, and not on how long they’ll take to complete.
In this article, we’ll explain some of the problems with hourly billing, and how project-based pricing at Pathbrand benefits the businesses that work with us. So, whether you’re a client looking to work with us, another internet agency, or even a fellow agency owner interested in a new approach, read on to discover why project-based pricing is the way to go.
Problems with Hourly Billing
While hourly billing has been a common practice in the service industry for decades, it’s not without its flaws.
Firstly, hourly billing encourages slower work. Agencies and freelancers who bill by the hour may be tempted to take arbitrarily longer on a project in order to increase their billable hours, even if they’re actually capable of completing the work more quickly. This can obviously lead to frustration for the client, who may feel that the work is taking too long, and for the agency worker or freelancer, who may feel like they are not being compensated fairly for their skills.
Secondly, hourly billing penalizes proficiency and speed. If an agency designer or developer is highly skilled and experienced at what they do, it’s reasonable to expect that they would be able to complete a project in a shorter amount of time than someone who is less skilled.
However, if they are billing by the hour, they will earn less for finishing the project in less time. Sound unfair? It is. Hourly billing creates a weird disincentive for the agency worker to finish their work as quickly as possible. Worse, it may make them less excited to improve their skills and become more efficient overall. Why would they bother to learn more if going slow makes more money?
Finally, hourly billing can create unnecessary tension between clients and service providers. If a client feels that a service provider is taking too long on a project, they may question whether the agency is just taking longer to increase the hourly bill. On the other hand, if an agency service provider feels that they are not being compensated fairly for their time and expertise, they may start to feel resentful towards the client. That kind of tension can lead to a breakdown in communication and trust, creating a stressful working relationship. Nobody needs that!
How Project-Based Pricing Benefits Our Clients
By using project-based pricing, we’ve been able to provide our clients (and web agency team members) with a number of benefits that simply aren’t possible with hourly billing. Here are just a few ways in which our project-based pricing model benefits everyone:
- Clear and Transparent Pricing: With Pathbrand’s project-based pricing, our clients know exactly what they’re paying for upfront. There are no surprises or hidden fees, and they can budget accordingly. This allows our clients to make informed decisions about their projects and helps them to avoid any financial stress or uncertainty.
- Faster Turnaround Times: Our developers and web designers are motivated to complete projects as quickly as possible. If our team member is still calculating in their head how much they make per hour, they can earn exponentially more with project-based billing – if they’re fast. This means that our clients receive their projects in a timely manner, allowing them to move forward with their business plans or initiatives without unnecessary delays.
- Top-Quality Work: With project-based pricing, our team members are incentivized to deliver the best possible work for each project, and get better with each project. It encourages personal growth and learning so they can become better and more efficient with every project and task. Members with more skill are rewarded appropriately. Everyone is happy!
- Increased Collaboration: Our project-based pricing model encourages increased collaboration between our team members and our clients. By focusing on the project as a whole, rather than on the number of hours worked, we’re able to work more closely with our clients to ensure that we’re meeting their needs and delivering top-quality work, without a stressful back-and-forth about how many hours it’s going to take.
Try It Yourself!
Escape the nail-biting. While hourly billing has been standard practice for many years, it’s just not the best solution for web development companies and internet marketing agencies.
At Pathbrand, by focusing on the project’s skill level and complexity, we can provide clear and transparent pricing, faster turnaround times, and top-quality work.
We’ve seen how this encourages increased collaboration between our team and clients, better communication and trust. And trust is everything in this business!
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Welcome to our Insights Blog! We're Pathbrand: A Connecticut-based Internet marketing agency specializing in brand strategy, website design and development, and Search Engine Optimization (SEO) for growth-focused businesses. Want more? Sign up to receive tips in your inbox!