Billing for many services or products, such as spectacular presentations, videos, or e-courses, can be project-based or hourly. It very much depends on where you and your company are in terms of business growth.
what is an hour
The difference with hourly billing is that you don’t have to define what an hour is. You will have to define how fast you work in that hour or how much you do, in terms of productivity, but you don’t have to define what an hour is.
The difficulty with project-based billing is defining what the project is. When they both decide what the project is, that’s what they get paid. If it goes beyond the scope of the project, you charge more and put it in the contract.
Get started with hourly-based billing
There is a diminishing return with hourly billing, but you should start with hourly billing.
Example:
A lawyer charges by the hour. Let’s say a lawyer starts at $150 an hour. A lawyer who is just starting out at $150 an hour will not be as efficient as a lawyer who has been practicing law for a year.
If that attorney still charges $150 an hour and has been in the legal industry for a year, then that attorney is falling short. They are doing more things, but billing at the same rate.
They’ve gotten better at what they do, but they’re making less money because they’re becoming more productive during that hourly time frame.
What does a lawyer? Their fees go up, and that’s why a junior partner bills less than a senior partner. Also, they have less clout at a junior level.
You give your stuff to junior partners to do the hard work, and you pay them in exchange for time to think. As you get richer, you spend more time and get paid more to think. I have more time to think now than 10 years ago. Critical thinking time is what you will ultimately get paid for once you get to a very high level.
With hourly billing, it becomes preemptive if you get to a point where I’ve seen a lot of consultants charge $1250 an hour, $700 an hour, even $500 an hour for a lawyer. I know lawyers who charge more. That’s a lot of money, so even saying hello to someone costs you about a dollar.
Hello, that’s a dollar. How are you? That’s a dollar and a half. How is your family? Wow, shut up, that only cost me three bucks. We’re not trying to be funny, we’re serious.
Here’s how you’re progressing with hourly billing
Here’s how you progress with hourly-based billing. How you get into project-based billing and an example will be described in another article.