The Hourly Billing Model Paradox

Several years ago we realized the hourly billing model was inherently flawed, and yet curiously, it is an industry standard for many service companies and freelancers.

We asked ourselves some big questions... How is it ethical to simultaneously look out for a clients best interest while trying to bill as many hours as possible? The answer is, it isn't ethical, of course. And in the words of Jim Coudal of Coudal Partners, how do you bill for a brilliant idea you had at the McDonald's drive-thru? Is it only worth 5 minutes of time? No, of course not. It took you a lifetime to come up with that brilliant idea. If you are reading this post you have probably asked yourself these questions but weren't sure how to solve them.

Herein lies the root of the problem. The hourly billing model is a paradox which sets the stage for wasting time, and yet creates an invisible boundary preventing financial growth. How many freelancers out there seem to work round the clock but are always living hand to mouth? Ah, the HBM paradox. Now you know.

How to solve the paradox and course-correct you ask? Value. Its that simple. Only you can decide what your thoughts and solutions are worth, its not a commoditized "industry standard". Picasso paintings are not all the same price, and they are not the same price as a Monet. Why would all your work have the same value of an hourly rate?

Can you do a job fast and great? Can you solve problems that will save thousands in development waste? Do you offer great customer service? This is all valuable knowledge or process, shouldn't you get paid for it?