Why does everyone “know” you shouldn’t charge by the hour?

The other day I talked about why I reveal my rates up front, on my website.

It has to do with not trying to appeal to tire-kickers, while using email marketing to automate the process of building value to ideal prospects — so they're already planning to hire me by the time we talk.

Ben wrote me back to say:

I read a great article which reminded me of how you do business NOW.


Looking back, did you used to charge hourly? When/what was the "Aha!" moment for you?

But this isn't entiiiiirely how I do business.

The takeaway from this article is that you shouldn't charge by the hour at all. Don't exchange your time for money. Exchange value for money instead.

That sounds very clever and reasonable until you notice that no matter what you do, or how you frame your prices, it always comes down to a time:money ratio.

Selling a product? How long did it take you to produce and market it? How much time do you spend doing admin stuff like processing refunds or fielding customer problems? Now, what do you charge per item, and how many items have you sold?

(products sold * product cost) / time spent on product = your hourly wage

It ain't rocket surgery. Some of these hourly wages might be friggen fantastic, and that's what you want. But it always comes down to money over time for you, if not for your client.

But there's definitely a place for charging by the hour — especially for consultants.

For example, MANY people who come to me for help with their online businesses have a bunch of things they want me to do. Very often they want some advice on how to update certain pages of their sites to convert better (but they can take care of the implementation themselves). They also want advice on how to adjust or implement an autoresponder sequence. And very often they want coaching on writing emails for those sequences.

It doesn't make sense in situations like this for me to try to scope up everything they could possibly need and quote them a project fee. There's lots of little stuff that could change at a moment's notice, and as we work we might discover all kinds of other things we want to focus on as well.

So I just tell them, look, we can take care of some of the really important stuff in about 4 hours. Why not retain me for 4 hours to start, and then we can see how it goes from there?

That way they can ask me to do whatever they want, without worrying about how much it will cost in terms of a project — and we can add or subtract from the original scope on the fly without any difficulties.

So I have standard retainer agreements that I use MORE often than the various bundles I offer. (Homepages, landing pages, autoresponder sequences etc.)

Of course, if ALL someone wants is a new homepage, then it makes sense to charge them a project fee. Why? Because it gives them peace of mind that it will cost what it will cost, and whether it takes me 10 hours or 20 hours or 40 hours makes no difference to them. They won't pay more if I happen to take longer.

I think you'll find a lot of consultants work on a similar model. In fact, even the gurus are shifting towards it as they discover that it's harder and harder to sell products online.

So don't discount charging by the hour just yet…

Talk again soon,

Btw, if you want to learn a bit about writing good email autoresponders, that's the topic of this month's Shirtsleeves Marketing Communiqué, which goes out next week. Grab a subscription here:


D Bnonn Tennant
‘The Information Highwayman’

D Bnonn Tennant, ‘The Information Highwayman’, signs his name to this