Pricing Q&A: Should I charge by the hour? Or by project?

should you price by the hour or by project

When it comes to pricing, this is one of the most frequently asked questions – and it’s also one of my favourites, because I get to break out a classic consultant answer: It depends.

There’s a strong push right now in the entrepreneurial world to price based on project deliverables, rather than by the hour. But to use a ‘peanut butter approach’ and apply this technique to every business blindly would be a mistake.

Usually, yes – I’m in favour of stepping away from the time clock and finding a way to price your services based on the value you’ll be delivering instead of the minutes it takes you to do so – but sometimes an hour is an hour, and trying to shoehorn the service you provide into another pricing model isn’t going to work.

Here’s my take on when to price by the hour, and when to go with a project based model.

The hourly pricing model is great for…

When there’s face-to-face time during the execution

Clients are quite literally buying your time for some services. Whether it’s an hour on Skype for a coaching session, 90minutes being all blissed out as you work your massage therapy magic, or 30minutes of getting their ass kicked during a personal training appointment. Pricing by the clock for services like these doesn’t limit you to one-off purchases though…bundling up to offer 4 coaching calls, 6 massages or 12 training sessions is a great way to secure results for your clients, and revenue for yourself.


When you’ve got extra work added onto a project you’ve quoted

Time based and project based pricing doesn’t have to be mutually exclusive – they actually work together really well for larger scale projects where – let’s face it – scope creep is a reality. Setting an hourly rate for work you’ll do for a client that falls outside of your existing agreement is a great way to keep them on track with those  “Just one more thing…” requests, and if you set that rate high enough it’ll make up for that pain-in-the-ass factor at your end.


When you’re just starting out and aren’t 100% clear on your process

Trying to quote an entire project when it’s your first time – or even 5th time – at the rodeo can lead to numbers that are really far off from the reality of what you need to invest to make that client work happen.  An hourly rate lets you find your bearings and track your time, so that your future project quotations or package offers yield adequate reward both for you and for clients. While you’re working out the kinks, provide rough estimates to clients of the required hours, and keep them in the loop if there’s an overage of more than 10% so that there aren’t any unpleasant surprises when the invoice arrives in their inbox.



There’s no shame in charging by the hour. It doesn’t make you naïve or foolish as a business person...and don’t let anyone tell you otherwise.

If it works for you – you’re earning enough, you aren’t working yourself into the ground, and there’s no resentment brewing about feeling undervalued or underpaid…then bravo for finding a model that works for you!


The project pricing model is great for…

When the work you do happens behind the scenes

Sometimes the expertise and strategy you pour into client work doesn’t happen in real time. It’s the hours you spend playing with concepts, trying out strategies and then crafting them into a deliverable that really generate value. Wrapping up all of that time and energy you invest into your work with a project based price allows you to take into account not just the face-to-face time you’ll spend with clients, but all of those other pieces of the puzzle as well.


When your super power is efficiency

If you’ve honed your skill set to allow you to achieve in 15 minutes what would take another person an hour to complete, using an hourly rate is pretty much just punishing your efficiency. You’ll make 25% as much…for delivering all the same work. No fair! Going with a project based price allows you to continue being your efficient self, while not being short changed in the revenue department.


When you’re experienced enough to be positioning yourself as a specialist

Some fields are seem as commodities, and it’s only when you have a special or strategic value add to your client that you can break out of that mould (and hourly model) to start charging based on the outcomes you deliver. VAs are a great example of this. Most charge by the hour, and that accounts for the time spent sifting through emails, updating social media or dealing with data entry. But when you start bringing a strategic benefit to your clients – taking decisions on client relationship management, coordinating large-scale events, or even negotiating contracts on their behalf - the hourly model just stops making sense.



Here’s the best part about hourly and project based pricing models. You can try one on for size, see how it feels and whether or not it’s hitting your sweet spots financially…and if it’s not…change it up.