If you’re a web designer billing by the hour, let me show you why switching to value-based pricing could mean higher income, fewer work hours, and happier clients.
Here’s a quick look to help you decide what’s best for your business.
Why Hourly Billing Can Be Limiting
Hourly billing is common across industries, and while some web designers thrive with it, it has significant downsides, especially for freelancers. Here’s why:
Invoice Disputes
Billing hourly means tracking every minute and often debating with clients over time spent. Even with time-tracking tools, clients may still question your invoices, which eats into both of your time.
Micro Management
Clients often ask for an hourly estimate and then base their budget on it. If the project takes longer than expected, you’re stuck either covering extra hours yourself or going back to the client for more money, which can hurt the relationship.
Discourages Efficiency
With hourly billing, you’re not rewarded for working faster or smarter. In fact, you could end up earning less for being more efficient.
Misaligned Goals
If a project drags on, you earn more, but the client ends up spending more. This sets up a dynamic where clients may feel pressured to track your time, which can damage trust.
How Hourly Billing Hurts Client Relationships
Imagine you’re building an extra room on your house. The contractor says it’ll be $75,000, but halfway through, they say it’ll take an additional $15,000 to finish. That’s frustrating, right? That’s how clients feel when web designers come back for extra hours. Clients want a clear, predictable final cost, but hourly billing often leads to unexpected expenses.
Most clients interpret “estimate” as a final price, even if you clearly state that it’s flexible. When you exceed the estimated hours, you’re either working unpaid hours or risking a tough conversation about additional charges, which can strain the relationship.
Hourly Billing Discourages Innovation
Imagine ten web designers bidding on a project. “John” charges $45 an hour and takes 16 hours to finish, while “Bob” charges $150 an hour but only needs 3 hours. With hourly billing, there’s no incentive for efficiency; in fact, slower work equals higher pay.
Plus, managing multiple clients with hourly billing often requires extra admin time—tracking hours, preparing invoices, processing payments. All of this can take hours out of your week that could be spent doing the actual creative work.
Hourly Billing Caps Your Income
Another drawback of hourly billing is that your income is limited by the hours you can work. Let’s say you’re making $60,000 a year at $30 an hour, assuming you’re fully booked. If you want to make $100,000, you’d need to raise your rate to $50 an hour, which can alienate clients who aren’t prepared to pay more.
Hourly billing often puts you in a situation where you can’t increase your income without losing clients or bringing in new ones willing to pay more. This can lead to stagnation, or worse, burnout from overworking to make ends meet.
Why Value-Based Pricing Works Better
Value-based pricing is a method where you price based on the result or value your work will bring to the client, not the hours it takes you. Here’s why it’s effective:
You’re Selling Results, Not Hours
Clients pay for the results you bring, not the time spent. This encourages you to work more efficiently.
Motivation for Growth
Because you’re paid for the end result, there’s motivation to use the best tools and keep up with industry trends.
No Surprises for Clients
Value-based pricing gives clients a clear cost upfront, so they know exactly what they’re paying and what to expect in return.
You can earn more per project, meaning you need fewer clients and can focus on providing each one with exceptional service.
How to Set a Value-Based Price
Value-based pricing requires estimating the financial impact your work will have on the client’s business. Here’s a simple approach to setting a value-based price:
Example 1 – Existing Business Website:
Let’s say a company selling agricultural drones asks for a website to boost sales. Currently, they make 10 sales a month at $8,500 each.
By improving their website, you estimate they could get two additional sales per month. That’s an extra $16,000 monthly, or $200,000 a year. Pricing your project at $10,000–$15,000 (5–7% of the expected annual return) is fair to both sides.
Example 2 – New Business Website:
A startup also wants a sales-focused site. After learning about their product and market, you estimate they could make four sales a month. That’s about $400,000 yearly, so pricing your work at $10,000–$15,000 is again justified.
The key here is to position your work as an investment with a clear return, not a billable service tied to hours worked.
Competing Against Hourly-Based Web Designers
There will always be web designers charging low rates on platforms like Fiverr or Upwork. The way to stand out is to show clients that you’re providing business value, not just selling your time. Think of luxury items like high-end watches. People buy the $10,000 Rolex not because it tells time better than a $100 watch but because it represents quality and status. Your goal is to position your services as the “Rolex” of web design.
Here’s how:
Pick a Niche: Focus on a specific industry where you have expertise.
Be an Authority: Position yourself as a specialist, not a generalist.
Educate Clients: Use blogs or social media to explain the value of what you do.
Offer Additional Services: Consider adding marketing services that increase the value of the website you create.
This approach shifts you away from being seen as a commodity, allowing you to charge more and attract clients who value quality.
Using Value-Based Pricing for Non-Sales Projects
But what if you’re working with non-sales clients, like a charity or political organization?
Here’s how to make value-based pricing work for them:
1. Understand how they generate revenue (e.g., memberships or donations).
2. Estimate how much each new member or donor is worth.
3. Show how a professional website could help them bring in new members or donors, then set your price based on that value.
If you would like to know more about pricing web design projects, check out my video:
The Bottom Line
Value-based pricing lets clients see that you’re focused on their outcomes, not just your hours.
Moving to value-based pricing shifts your mindset from trading hours for dollars to providing business results. It allows you to attract clients who see you as a partner in their success rather than just another contractor.
If you’d like more help, join FreelanceFam for advice on designs and general freelancing tips too.
Kyle