How To Move Your Clients to Value-Based Pricing

If you’re a small business owner providing services and billing your clients based on time, at some point you will realize that despite having a busy schedule, you aren’t making enough money to either sustain or grow your business. You’ve run out of hours in the day, but you aren’t close to meeting your revenue goals. When this happens, you question a few things such as asking yourself if you should hire help, increase your prices, or change the way you bill your clients.

You may decide that it is finally time to move away from billing hourly and start billing based on project fees or value-based pricing. However, you are hesitant to do this because you fear it will be difficult to convince clients to change how (and how much) they pay you. They may think they are now paying more for the same service (which they might be), and you need to do a little work to get them on board.

While they may see this as paying more for the same services, they really aren’t when you consider the added benefits they gain. Moving from time-based to project or value-based pricing is not only beneficial to you, but offers several benefits to your clients. To keep them as clients, you need to communicate how they will benefit from the change.

Benefit #1: Value-Based Fees =  Better Client Service

Hourly billing means you need to serve as many clients as possible, which gives each of them less time and less of your focus and attention. However, once you move away from time-based billing you no longer need as many clients, and you can provide better client service with more focus and attention to their needs.

Benefit #2: Value-based pricing makes it easier for your clients to budget.

If clients are given a flat fee, they can easily budget for your services. In contrast, hourly billing creates uncertainty, and makes it difficult for them to budget.

Benefit #3: Value-based pricing is “all-inclusive.”

Hourly billing can lead to work being “half-done” if the client is concerned about going over the amount they have budgeted for your services. Value-based pricing is more “all-inclusive” and they don’t need to be concerned about work not being completed, or having to settle for less than what they need.

It becomes much easier to move clients away from time-based billing when you show them how value-based pricing gives them greater benefits such as better budgeting, all-inclusive services, more focus and attention to their needs, and higher quality customer service.

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