3 Key Reasons Why You Should Stop Charging an Hourly Rate
Many self-employed service-based entrepreneurs and freelancers charge an hourly rate for their services. And while it may seem like a good idea, charging an hourly rate is actually hurting your earning potential. Despite allowing you to be compensated for your time and services, we recommend that you refrain from charging by the hour whenever possible.
Now, we understand if you still need convincing as you may be accustomed to doing things this way. To help you out, we thought it would be useful to put together a brief discussion on this topic. If this is something that you’re interested in learning more about, read on for three key reasons why you should stop charging an hourly rate.
It Puts a Cap on Your Potential Income
As we’ve already mentioned above, charging by the hour is actually hurting your potential earnings. This is because time is a limited resource and you’ll never be able to earn as much money as you should. Think about it this way, you can only really work 40 hours each week. Given this, your weekly income will be capped at £2,000 if you charge an hourly rate of £50. And while this may seem appealing, you’ll have to consider the hours that won’t count towards your billable hours. To add to this, taking days off or getting sick will hinder your ability to earn.
It Incentives You to Work Slower
Charging by the hour also incentives you to work slower. Not only will this make you less efficient but it also affects client satisfaction. Now, we really can’t blame you for wanting to spend more time on your work as it will increase the amount that you earn but keep in mind that it will affect how clients perceive you and your service. Another thing you should consider is the amount of work you’re missing out on by spending too much time on one project. While it may seem worthwhile to spend 10 hours on one project that you could finish in 5 hours, the extra five hours could be better spent working on another project for another client.
It Devalues Your Skills
Lastly, charging by the hour devalues your skills. Think about it. If you’ve gotten to the point wherein you are able to work efficiently and get things done quickly, why should you be earning less than if you work slowly? Charging by the hour ignores all the time and effort that you’ve put into getting to your current skill level. At the end of the day, the time you spend working on one project doesn’t accurately reflect your skills and the amount of work you put into it.
Hopefully, this article has helped you better understand why you should avoid charging an hourly rate. As you can see, charging by the hour is hindering your professional growth. Instead of charging an hourly rate, we recommend that you charge a fixed price for your services. Not only will this incentivize you to get more work done, but it also allows you to focus on the value of the service that you’ll be providing.
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