Why Charging Time For Money Doesn't Work - Robin Waite

08 Oct 2021

A bit about today’s episode

In this episode of The Fearless Business Podcast, host and coach Robin Waite share the most common reason why most small businesses and freelancers are underselling themselves - they are charging by the hour!

What we will be discussing today

  • Why Hourly Charging Rates are Unethical
  • Opting For a Results-Based Pricing Strategy
  • Pricing and Mindset Business Tips

Listen to the Full Episode

Why Charging Time For Money Doesn’t Work

In this episode of The Fearless Business Podcast, host and coach Robin Waite share the most common reason why most small businesses and freelancers are underselling themselves - they are charging by the hour!

Many people who come through Fearless Business own service-based businesses that run on a time for money pricing model. Here’s why charging by the hour is highly detrimental to your company and ultimately doesn’t work.

Hourly Rates Are Fundamentally Unethical

Controversially Robin deems hourly rates as unethical. He believes that independent business owners tend to undersell themselves when following such a model. Here’s an example using person A and person B:

  • Person A - hasn't been freelance long, they're slow to deliver, and the quality is poor. In addition, it takes them 10 hours to do the task.
  • Person B - charging the same hourly rate, had 20 years of experience and completed the task half the time to a higher standard.

If their hourly rate is the same, then the more experienced person who gets better results makes half the amount of the inferior supplier.

So What Should You Do Instead?

Robin recommends that entrepreneurs should opt for a “results-based” pricing model.

“The more experienced supplier could charge more for their products; a better way to charge more would be to charge based on results and outcomes. Imagine if the more experienced freelancers charged 5x or even 10x the same product or service price. But, they could guarantee their results.”

This form of pricing works out for both business owners and consumers as it’s better financially for both parties overall. As highlighted above the business owner gets to charge more for their product and the consumer (with the guarantee in mind) shouldn’t have to pay more for amendments like they would with a freelancer that works on an hourly contract.

Money-Back Guarantees = Confidence

It’s common for business owners to shy away from money-back guarantees as they feel that the consumer will immediately ask for a refund; however, this is rarely the case in reality. For example, throughout his career working as a business coach, Robin has only received two requests for money-back guarantees.

Why? Because the service he provides is worth the money, and he knows it. Typically, the reason why entrepreneurs are reluctant to offer money-back guarantees is more of a self-confidence issue. But, at the end of the day, if your product/service is as good as you claim it to be, why shouldn’t you offer a money-back guarantee?

Money-back guarantees also build trust with your clients. They can see that the business owner is so passionate about the services they provide that they can have their money back if they don’t like it. It also signifies a higher quality of service.

If you’d like to know more about money-back guarantees, check out last weeks episode.

Watch The Video

Robin also goes over hourly pricing models over on his YouTube Channel. To see more visual examples subscribe now and watch the video here:

To find out more about Fearless Business:

Join our amazing community of Coaches, Consultants and Freelancers on Facebook:
>> https://facebook.com/groups/ChargeMore
And check out the Fearless Business website:
>>https://fearless.biz
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