Hourly vs Value-Based Pricing for Freelancers

Hourly vs value-based pricing is often a hot topic debate in the freelance world

While it’s easy to say you’ll work X number of hours for Y amount of pay, is this really what’s best?

As you grow in skill and accuracy, you’ll start to complete tasks faster than before.

This leads to you completing the same number of tasks in less time and getting paid less overall to do it.

You’re getting penalized for being good at what you do.

Using set rates and packages can create a value-based pricing system to combat this dilemma.

In this lifestyle episode, I break down one story from my college days where a college professor told me I couldn’t possibly get an “A” in the class if I didn’t spend at least 8 hours on homework each week.

Needless to say, I wasn’t happy with my A-quality work receiving an F, and I was going to fight tooth and nail to battle the broken system.


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Video Transcript

Hey guys, this is Julie here doing another lifestyle episode.

I have a story I wanted to tell you guys, that happened to me in college and I think it depicts some of the problems that we have in business today about hourly pricing versus value-based pricing.

I was a sophomore in college and I was a real goody two shoes. Like I got A’s all the time and I had this ethics professor, I had an ethics and philosophy class.

And he completely through all of us for a loop on the first day of class because he said, listen, guys, you know how you get graded A, B, C, D, and F?

And we’re like, yeah. He’s like, well, this is how it’s gonna go in this class.

If you commit to doing eight hours of homework a week, you’ll get an A. Seven hours will be a B. Six hours will be a C. Five hours will be a D and four hours will be an F.

He’s like, all you have to do is do eight hours of homework or work from this class a week and you’ll get an A.

So I was like, you know, a know-it-all, excuse me, what if it takes us less time to do the homework, are we going to get an F?

And he’s like, well you should spend the full eight hours? And I’m like, but what if it doesn’t take me that long?

And he didn’t really get it. So as the semester wore on, I started to be a complete smart ass.

So I would do the project and it would take me, let’s say it was a paper and it took me four hours, maybe even three. I was really fast. I’ve always been fast and I’d go in, I’d hand the paper in.

And I’d get comments back that were like, “this is an incredible paper. You could write this course.”

You know, just like major, major compliments.

And then I’d go up to him and I’d be like, “this took me three hours.”

And then he’s like, “well you need to think of more things to do.”

And as the semester went on, I realized I was getting penalized for being fast.

So I took on extra credit. Still didn’t amount to eight hours a week. By the end of the semester. I told him, “listen, listen, Mr. Professor, I’m not gonna lie. I’m not going to put that. It took me eight hours a week. It only took me four. I’ve done extra credit. I’m not really sure what you want me to do. Do you want me to spend three hours writing a report and then six hours changing the font and call it like nine hours of work?”

The long and short of it was I started to attack his grading system. I told him it wasn’t fair, it wasn’t right. I was being penalized for being fast and efficient.

He disagreed and we got in a huge argument and sure enough at the end of the semester, I handed in my time sheet because that’s what we had to do and I handed it in and it was the equivalent of four hours of work a week.

I had all A’s all the way up until this point in college and I got an F.

Well, I was not happy. He was very angry that I had pushed him up against a wall and he said, I had no choice. You were the best student in the class, but I have to give you an F.

And he was psycho that he thought this was okay. So I went to the head of the college and I said, I want to contest my F, and he said, okay, but you have to go through these big proceedings and it’s like college court. I didn’t know there was such a thing.

It took me five months and I went through a panel and teachers. I asked in the middle of the proceedings, I said, “has any student ever won?” And they said, “well one student one, once they got their C- turned to a B+, but otherwise no students don’t even win.”

I spent five months pleading my case and stating my arguments, and I remember the day that the fax came in on my mom’s computer at work and it said from the provost, your grade has been turned from an F to an A+.

It was the first time in university history, a student had ever won such a dramatic difference in grades and I thought this was a great story to tell at Thanksgiving, but now as a business owner later, I realized what I was fighting against was this idea of hourly pricing, that the faster you work, the more penalized you get.

So if you are pricing per hour, stop, start thinking in value and packages and results.

And I hope that story… You remember that story of the Crusading College Julie trying to overturn.

Turns out Mr. Professor had to go take a sabbatical.

I didn’t. He didn’t get fired. He didn’t get fired. He just took a sabbatical because fighting with me for five months, tired him out.

If you like these lifestyle episodes and you want more, let me know in the comments below and if you don’t and you want to just hear marketing, let me know that too. You can find more videos like these over at Juliestoian.com