3 Reasons Not To Charge By The Hour

Billing a client by the hour may seem to make the most sense to your bottom line profits.

However, unbeknownst to many…

It’s often the most destructive thing you can do to a project.

Here are three reasons, of many, why we (at Metacake) have chosen to stay away from billing by the hour.

1. Hourly wages are for clients, not partners.

We do client work, but we’ve yet to have a client. We have, however, worked with hundreds of partners.

There is naturally a psychological chasm between the way one works for a client and the one way works with a partner. The former limits investment, passion & emotional buy-in. And though it may yield a finished product, it’s rarely a product that both parties are proud of. The latter offers real investment, emotional equity, and from our experience, creates a culture for the best work to be executed.

Charging by the hour creates a client work culture that naturally causes a team to get lost in accomplishing tasks, rather than committed to developing real solutions for a partner’s pain points and business objectives.

The good news is that we can create this effective culture of partnership with one decision. Not charging by the hour can mean an instant psychological boost that a team needs to make good work – great.

2. Hourly wages don’t incentivize productivity.

Tracking hours can often breed an ineffective & inefficient culture that caters to slow-moving clock-watchers that have zero reason to work efficiently and no attachment to the end product. Often, an hourly worker inevitably find ways to serve the clock, rather than the partner.

Another way of billing can and will change this. Even the most gluttonous time servants are forced to learn how to be productive when not being paid to sit at their desk and watch the clock.

3. Hourly wages don’t cultivate relationships.

With a psychology of approaching clients like partners, the relationship we are able to form and cultivate during the life of a project is the most valuable part of what we do. That relationship is not only what drives us to produce great work. It’s a way to bring an entirely new level of enjoyment to our work. (Not to mention, it’s the best marketing one could ever do as a company.)

In our experience, hourly wages have often cost us a depth of relationship with our clients.

Namely.

• Hourly wages make clients hesitate before calling to discuss the betterment of a project or necessary details in fear of getting hit with a bill for an hour phone call.
• Hourly wages create unexpected end costs and leave clients feeling nickel-and-dimed. This often leads to a lingering bad taste in their mouth & may cause them to look elsewhere for their next project.
• Hourly wages make clients nervous and cause them to try and manage the time allotted to a project rather than handing over control and enjoying a worry-free experience.

Find a billing win/win.

Our alternative to billing by the hour may or may not make sense for your company. However, we believe that for a project to be a true success, both parties must have skin in the game and be willing to take a mutual risk. The way we do this as a service-oriented company is to bill by deliverables.

Our risk is that, sometimes we have to spend more time than what we had originally allotted for the project, and we’ll still be compensated the same amount.

Because of this, billing by deliverables may not look smart for us on paper.

However…