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Reply To: Why shouldn’t you charge by the hour?

Chip Griffin
February 1, 2022 at 1:23 pm #14785

I prefer to avoid charging by the hour because it typically impairs the free flow of communication between the agency and the client because the client hears the clock ticking every time they speak with the agency.

You don’t want to miss out on getting some valuable information or insight because the client is afraid of the next bill.

It also tends to lead to absurd conversations with clients about how long it takes to do a particular task. When they get the monthly bill, you inevitably will have someone on the other end wondering why a particular email took 1 hour instead of 30 minutes to produce.

All of that said, there is a time and place for hourly billing.

If you truly don’t know how long a project will take to complete or if the amount of work will fluctuate wildly (and unpredictably) from month-to-month for ongoing arrangements, then hourly billing may be your best bet.

So don’t reject hourly billing out of hand, but understand when it makes sense (and when it doesn’t).

Finally, none of this absolves you from the need to know what your minimum effective hourly rate must be to achieve the profitability that you are seeking. Then you need to carefully track the amount of work you invest in a project so that you can check yourself and see what your actual effective hourly rate is. That informs future scoping and pricing decisions.

Chip Griffin founded the Small Agency Growth Alliance (SAGA) to help PR and marketing agency owners achieve their goals.

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