0

I always have the doubt about how to charge clients. I offer internet marketing services (SEO services mainly) to small and medium business that make at least 1 million € in sales over a year.

The average client of these types of business pays them around 10.000€ per year.

So the question is...is it fair to charge them based on the amount of money they can make with one client or it would be better to charge them based on my hourly rate.

I mean, if they make 10.000€ (not revenue of course) with one client and I help them get 2 more clients per month, should my services be worth based on how much could they make or based on my normal rate per hour?

  • Your use of pronouns "they" and "them" makes it very confusing to figure out which party is which, and what you're really trying to find out. – Xavier J Mar 30 '15 at 15:20
  • I think it is clear. I am not native anyway. – Alex Mar 30 '15 at 22:56
2

In this type of business, it's my feeling that charging by the hour is not the way to go, as it does not reflect the value of your services.

if they make 10.000€ (not revenue of course) with one client and I help them get 2 more clients per month

In your example, you are adding 20K value per month for your client. What is that kind of return worth to them? The amount of time you spend doing that should be irrelevant. If you can do it in 4 hours or 40 hours, the value to the client is the same.

If you charge for the service itself rather than for the number of hours, you are not being penalized for efficiency, as you get more experience and are performing the actual tasks more quickly.

I call this project-based pricing rather than hourly pricing.

  • Thank you for your reply @Voxwoman - The thing is that it is not easy to explain to the customer that you want to charge them by project. They are used to pay per hour. Also, it is really difficult to know how many leads are you bringing them if they don't tell you. – Alex Mar 28 '15 at 21:39
  • A more common term for this pricing is value-based pricing .... and I too support this as opposed to hourly pricing models. – Scott Mar 28 '15 at 22:09
  • Any good formula to calculate the value you are giving to the client and cut your percentage from it @Scott ? – Alex Mar 28 '15 at 23:39
  • @Alex Because I'm not directly in your realm of work, I wouldn't know. I know my area of work and my demographics. That won't really translate to you. You can search Google for definitions, models, and more in-depth explanations of value based pricing. – Scott Mar 28 '15 at 23:42
  • Here's an introduction to value pricing. It touches on formulae, but not in-depth: freshbooks.com/breaking-the-time-barrier – Crowder Jul 8 '15 at 21:43

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.