PAGE 1.

WELCOME TO THE VICIOUS CYCLE: The insidious whispers of hourly logic

When one starts working for clients instead of bosses, they say goodbye to any work that's not, at least in a sense, creative. It
doesn't matter if you are a visual artist, a coach, a dev, a consultant, or even an accountant - each client will be different, and so
is the work they need to do. Clients grow, plans change - the work is never fully rigid or repetitive.

That kind of work requires full immersion - an unpredictable journey of inspiration and meticulous execution driven by skills,
intuition, and expertise so rote work is simply out of the question, even if highly specialized. But all that much-​needed insight
and imagination quickly rubs against the uncomfortable truth: clients focus on hours logged rather than any "magic" you
produce.

So while you work, with every passing hour, it's hard not to hear the subconscious "clinking of coins", drowning out the voice of
creativity. It's like the expert knows all of this inspiration could lead to a client saying "This is great! But why did it take 15
hours?". That subtle implication, that the value provided somehow wasted their time, cuts to the core and makes people like
you and me hold back in the future, which is bad for everyone involved, very much including the clock-​addled future clients.

The purpose of this 4-​page cheat sheet is to provide you with a quick win: banishing the malicious
whisper of hourly logic from your pricing proposals and back to the corporate hell it crawled out of, and
replacing it with something you will like more and clients will trust more - per project pricing.

It's written to be actionable, packed, and as short as it can be without losing steam. Hold on to your hat, and let's go!
Brief history of how we got the hourly logic, and why we should not keep using it
Once upon a time, there was Henry Ford. He took apart the century-​old paradigm of work as an
opaque process and diced it into easily measurable individual tasks that could be improved on. This
was effective and spread like a wildfire that's still burning. And although it is a very clever idea to
treat services as machine parts, it's simply not applicable to all of service types.

Ford's model was designed to work tasks that basically anyone can understand and repeat by rote,
maybe with a week or two of practice. Does that remind you of any work that you do? I'd be willing to
bet that even the professional tasks that you consider "easy" would probably not be done well by a
random person from the street even if they had the help of a guidebook and weeks of training.

Because of this incompatibility, aligning pricing in order to correctly worship the "god of the
stopwatch" is NOT efficient, for the value-​driven professions or the clients that need the value
these experts provide. Symptoms of misalignment could sound familiar to you: Important parts
of scope get cut back, passion gets dimmed by too little sleep, and worst of all, elevate quantity
over quality that systematically undervalues your work.

I'm not saying viewing pricing as a function of pure hourly cost is a bad one for everything, but I am saying
that if what you are selling is expertise, it's a VERY bad model for your type of work. Clinging to hourly billing
can have bad consequences, which I will list here. If you find yourself agreeing with them, it's time to do
something about it, and that's what the rest of this cheat sheet is all about.

1. TIME PRESSURE: The ticking of the clock washes away potential for value-​
THE VICIOUS generating or time-​saving innovation. Or enough sleep.

CYCLE OF 4 2
2. MENTAL SIEGE: relentlessly tracking time drains up resources needed for
flair and passion. Or, again, enough sleep.

1 3. LOST POTENTIAL: The end result ends up missing much value it could
have gotten from the missed innovation and lagging flair.
HOURLY 4. UNDERVALUED EXPERTISE: Client perception is skewed by the muted
expression of value, leading to a value communication mismatch as your

LOGIC 3
hard-​won expertise gets grossly reduced to hours x rates. Not only will
that effect haunt the final invoice, but it's also likely to inform the
negotiations for the next project for this client, resulting in time pressure
on the next project as well. And so the cycle begins anew.

Experts are hired on the basis of their trust and expertise, and yet all of the time poured over
acquiring that trust and expertise suddenly becomes "invisible" for the purposes of assigning value.

Although everyone involved probably agrees that those hours are vital to the project outcome, they
somehow "don't count" because they technically weren't spent on the project execution.
Now, that doesn't sound like the rules for a game that one would like to play for a living.
If you agree, grit your teeth, or just grin a bit, and turn the page.
PAGE 2. HOW TO BREAK OUT OF THE VICIOUS CYCLE: Transformation to per-​project pricing

Emma shifted to from expected, open-​ended hourly fees and weekly reporting to selling closed comprehensive
packages. This led to some empowering changes.
First, without clients rushing through briefs she got more clues about why they needed what they wanted, so the
chances of costly late project U-​turns diminished greatly. Second, her passion replaced the stopwatch anxiety as
the main fuel for meeting deadlines, so the value of her work finally came into full view.

The clients could suddenly know what exactly they get for how much money, and she managed to negotiate that
reputation for end-​to-​end transparency into up-​front fees, giving her peace of mind even with clients from across
the globe, which together furthered the prestige and demand for her services, and price, in the longer run.
Sounds good? OK, let's move to on the brass tacks.

Per-​Project Pricing, Defined: How and why it works: After an in-​depth briefing session, using her
Per-​project pricing is a pricing structure years of expertise Emma can skip the padding tactics usually used in
where the expert professional charges a project proposals to calm down clients who are afraid of overpayment.
flat or fixed fee for an entire project. The Milestones, materials, follow-​ups, and options for additional support
price is charged on the basis of the value along the way can be offered but their use and frequency are not directly
provided through achieving the client's connected to the client's cost - it's all in there already. The client
goals as a result of the journey and understands the full cost upfront, eliminating the need to defend against
transformation, instead of the basis of surprise changes down the line. This means Emma can fully immerse
inputs that were used in the process. herself in doing the best work, resulting in rewards for both parties.

WHY CLIENTS
1. TAILORED PROGRAM - Requires both parties to focus on solving
the actual problem at hand, and feels more like a shared problem.
2. INNOVATIVE SOLUTIONS - Time becoming a tool rather than a
TEND TO END constraint is conducive to brainstorming out-​of-​the-​box solutions
3. QUALITY UNLEASHED- Expertise is unburdened from posturing

UP TRUSTING and can therefore produce more results for fewer resources.
4. TRANSPARENT INVESTMENT - With budget ambiguity eliminated,
securing investment becomes easier and less risky.
THIS MORE 5. LASTING RESULTS - Results are built to last, being more refined
and integrated into long-​term strategies.

Fixed scope makes vagueness a dangerous enemy Stick to your roles

... but that's now a mutually shared concern: This is not about ego, or at least it shouldn't be - you
Scope ambiguity is dangerous for all. The clients may fear that a fixed are working with your client to help them achieve
scope might deliver a result that, although technically finished, does not the project's goal, but not for him. Like a surgeon,
solve the problem. On the other hand, you know from experience that you are here to think first and operate second.
most expertise-​based work is so dependent on context that fully rigid
scope dies a horrible death 9 times out of 10 (see next page), and so If you plant that mindset into clear project outlines,
what initially looked like a 1-​day job might take a week to get sorted. But payment terms and change processes it becomes
the answer is not less planning, it's less ambiguity. hard not to stay aligned.

This is important: the client rarely knows enough to dictate what When pressed about it, most clients will agree in
needs to be done, like a task list. Only trust them to know the goal advance that the aim is not to deliver "drive the car
and time constraints. They may own the "car" (project), but they like I would", but to reach the goal. And by the end,
are paying YOU to drive it, so any tactical decisions should be yours if the end solution aligns with the client's goals, the
alone, they can at best advise you. Anything else is "backseat project value is always going to feel beyond their
driving" and will just spiral into additional risks for both of you. expectation, leaving you both happy.

QUICK STEPS BOX: Answer these questions to successfully transition from hourly to project-​based pricing.
1. Define your actual role: What transformations can you do? What changes can you slow down or accelerate?
2. Set milestones: What non-​paperwork parts of your output feel tangible to clients? What makes work feel done?
3. Ensure communication: How do you keep clients feeling updated with minimum actual time spent on both sides?
4. Protect the goal: How will you safeguard the agreed goal from new ideas or context changes? What if that fails?
5. Get the money: What would convince clients to accept the terms above and pay upfront for the value you provide?

Ok, enough about the mindset. On the next page let's start talking about scopes, rates, and fair play.
 PAGE 3. POTENTIALS AND LIMITS: First Things First - Your Costs Don't Limit What You Can Fairly Charge.
We all want pricing that feels fair for both parties. To that end, I'd like to warn about using the product-​pricing logic of
expensive components make for expensive products and form "fair value", everything else is "profit".

While mostly true for products, that statement is grossly inapplicable for pricing expertise. With expertise, "fairness" is about
perceived value, not costs or complexity. Medicines are so much more than just complex candy, even if the cost to produce is similar.

In case after case, when the client was massively grateful for the value received, they were never bothered by the fact that all the
expert really expended was a series of sentences and a little time. In technical terms, the cost incurred was minuscule in relation to
the fee, but the client couldn't have cared less about how the expert's profit margin looked. They felt they got real results and
paid less than they feared they had to. That's all the hallmarks a service price point needs to be 100% fair, and no other
factors apply. None.

Now, if showing value is the only thing that matters - how do we do that, without mentioning costs?

WHAT TO CHARGE FOR: How to Set Up Effective Project Rate Factors

The goal of a project rate is to take into account what the client gets in exchange for the money they pay. The goal of making
this list is simple, make the up-​front cost transparent and justifiable. In order to do that, include as many of the
following factors in your proposal, explicitly if you can. Every element of your offer, from its format to its contents,
needs to be trying to communicate something from this list and anything that you can't place in these categories
should probably be omitted anyway.

SCOPE COMPLEXITY
1. Coverage: what topics will I tackle? What is 1. Intricacy: How many intricate details or nuanced
deliberately left out to maintain focus? aspects are involved?
2. Depth: how extensively will I go into each 2. Trust: Are there areas or facets of the project that
topic or area? need extra attention or a delicate touch?
3. Communication: How often will we touch 3. Challenges: Are there any known hurdles or
base? Through what means? obstacles to anticipate?
4. Iterations: How many rounds of revisions 4. Integration: Will there be a need to mesh with
or adjustments are built into the process? existing systems or processes?

DELIVERABLE VALUE
1. Tangibles: What physical or digital items 1. Relief: what mental, emotional, or physical
will they receive? pressures can I remove?
2. Guarantee: Is there a promise of 2. New options: what will they be able to do after my
satisfaction, or ways to lower the fear of work?
risks, real or imagined? 3. Results: are there measurable results to show I did
3. Format: In what form will the deliverable be good work?
presented? 4. Tools: what items or techniques are they missing
4. Timeline: When can they expect each now, but will be happy to use them after the project?
deliverable?

HOW TO For your fixed-​price projects, preventing scope creep is crucial. This means using both clear
communication and clear formal contract terms to guard against any changes to scope. There

PROTECT Let's say that the project scope was to "deliver 2 cows to the client..."
are many ways to jeopardize the scope, so I'll try to warn you against the most common ones.

THE
Scope creep: During the Business creep: the client Effort creep: you decide that you
implementation phase, the client decides that they actually wanted also need to deliver a sheep no one
says they now expect to get 3 cows. them delivered as hamburgers. asked for, and not charge for it.
SCOPE: Hope creep: you deliver them Feature creep: the client Gold Plating: you decide that cows
quickly, and client starts to expect decided that they should be able need to be delivered in fitted tuxedos,
a delivery that swift in the future to produce goat milk on demand and expect the client to pay extra for it

QUICK STEPS BOX: a step-​by-​step to build a fixed-​scope, fixed-​price proposal

1. Asses client wants: Ask questions until you understand both the current state and desired future state. How is success measured?
2. Asses project needs: What scope of work is needed for the goal to happen? Does this roughly fit their time&money budget?
3. Communicate value clearly: What does the client really get from this project? Use as many project rate factors as you can.
4. Set boundaries to prevent creep: Outline possible inclusions and exclusions. Talk through all of the creep types that could apply.
5. Consider alternative paths: build trust by thinking of at least two different ways you could achieve the project goal. (see top of page 4)
6. Build the options: use the alternatives and the option tool (see page 4) to build at least two pricing options for the client.
7. Collaborate to choose the optimal option: explain the choices to them. After they choose, draft the contract and you are done.
PAGE 4. ODDS AND ENDS: First up, the client's suspicion shift, and how to deal with it.
If the client pays fixed per-​project prices, they quickly realize their budgets are no longer on the hook
for any inefficiency in the way you work. That means 2 things:
1) they don't care if you do things "inefficiently", leaving you more freedom to work how you like
2) trust is built differently - by showcasing dedication over efficiency
Clients no longer hope the expert will apply the simplest template to their project - they now dread it.
Presenting an alternative route to the goal allows the client to compare it with the chosen path. Even if
they don't know much about either of the solutions, the contrast between them showcases the expert's
dedication to crafting a bespoke solution, so clients typically see that a as reason to trust both options.

PROPOSAL TOOL: Tailoring Proposals Without Affecting Scope

Scope"Options" are usually the exercise of "OK, so you don't have the budget, so what part of the scope are we cutting".
But scope is so central to project-​based pricing that this tactic may not be ideal. But that doesn't mean that there is no way
to offer meaningful choices to the client. On the contrary, the elements of convenience, risk, and ego in your proposals
can help tailor your proposal to exactly what the client needs, while not affecting your bottom line. To use this tool, create
viable variations of your offer by assigning it different tiers on the three non-​monetary elements of pricing.
1. Convenience: the more they pay, the more time you reserve just for this project
a. Basic: The work will be done on Tuesday mornings and is never treated as urgent. Cost: $2000 (-33%).
b. Standard: Flexible delivery within a month, adapting to project timelines. Cost: $3000.
c. Premium: Given the urgent status, express one-​week delivery, is guaranteed. Cost: $6000 (x2).
2. Risk: the more they pay, the more risk you are willing to take
a. Basic: Pay-​per-​output model, everything is paid in advance. Cost: $100/deliverable. (-20%, zero risk to you)
b. Standard: Lump sum payment with additional fees for revisions and adjustments. Cost: $3000.
c. Premium: Guaranteed all-​inclusive package paid only after the results are in, covering revisions, maintenance,
and adjustments for a year. Cost: $7000. (x2.33)
3. Ego Cost: the more they pay, the less they look to outsiders like they ever needed your help
a. Basic: The client's story will be profiled as a case study and asked to provide references. Cost: $1000. (-60%)
b. Standard: The client is prominently listed as a client, expected to give a testimonial if all goes well. Cost: $3000.
c. Premium: Anonymous Collaboration, legal but set up not to leave any paper trail. Cost: $8000. (x2.66)

When building proposals, remember that you can combine tiers. For example, a client might want to be in a big hurry
and pay for the one-​week delivery guarantee (x2), but may also be happy to pay upfront (-20%), reducing the price to $4800.
This tiered approach allows you to tailor proposal options to align with client's priorities and offer them a real,
meaningful choice in your proposals, while keeping project scope consistent.

BREAK THE
WARNING: You can run from this decision, but you cannot hide
The hourly logic was designed for people who turn screws or wash cars, where the value
they produce stays fairly constant and stable through the years. When you are selling
CLOCK'S expertise, the value you produce grows with each year. It's completely reasonable to
expect the value to the client to double every few years, and if you look back at your

TYRANNY, career, that's probably about what happened with you. But the price we can charge per
hour, even if it starts high, can rarely grow quickly enough to keep up with value. Even if
you tried doing that, sooner or later you would feel the constraint of people calling you
OR BE greedy or unreasonable for simply trying to retain the same ratio of value capture that you
had before.

BROKEN I've seen too many cases where an expert saves a client from paying thousands of dollars
of man-​hours, legal fees, or missed revenue, or grief counseling with a single, 40-​minute

BY IT:
advisory session or task, only for the client to balk at paying $250 for it because not much
time was expended in giving advice. If that kind of logic is normal, I don't want anything to do
with it. To me, It seems unfair at best and morally broken at worst.
THIS IS THE WAY OUT: no need for grand gestures, simply quietly apply the following principles whenever you are able:
Capture Your Growing Value: Understand that as an expert, the value you provide increases over time.
Continually evaluate and update your pricing models to capture this growing worth.
Base Prices on What is Really Bought: Foster a mutual trust, understanding, and appreciation for the value
derived from your expertise, then base your pricing on that value, rather than your costs or time.
Educate by Offering Pricing Options: Some clients might resent not getting the hourly-​based proposal they
expected, but no one is going to resent additional options. So always try to at least propose fixed-​fee options as
well, and you will get plenty of chances to charge fixed-​fee projects.

Hello, friend. If you read this far, It's highly likely that your situation is similar to mine, and so I feel we are in this together. If you
feel that way as well, there are three ways to help: share this cheat sheet with someone who needs it, write back to me with
feedback at Filip@fearless-​pricing.com or visit www.fearless-​pricing.com and see if there are other ways we can help each other.