Yes, $14,400 per hour to fix a WordPress site, you read that correctly. There’s both a story and a lesson to be found in there for every solopreneur, so read past the story for the nugget. Some of the comments are top-notch, too.
Several years ago, before I started this company, I had an urgent request from a customer of the company I was with at the time. Her site was down. Hard. It was either a full page of errors or a white PHP screen of death and she wanted my personal, out of support scope help.
I told her that I’d get her running for $120. The short of the story is that I either went into her .htaccess file or her wp-config.php file and fixed it. In 30 seconds. Done. Site up, customer clapping hands over the Internet 1s and 0s.
The guilt
Then the guilt hit me. I just “took” $120 from a lady for something that took me 30 seconds to fix. That would be $14,400 per hour for 30 seconds of my life. I’ll never forget it.
I immediately e-mailed her a moment after telling her it was online again, thinking she was going to be pissed that she just spent $120 so quickly. I asked her if she wanted most of it back, like $100 of it.
No, I spent over an hour trying to fix it myself. I’m happy to pay that much for having my site back online, regardless of how much time it took you. It was worth $120 to me and I wish I’d asked you sooner so I could have that hour of my life and my site uptime back.
The lesson
Your skills, whether it be physical or intellectual, are worth a certain amount regardless of how much time you spend using those skills.
Changing a lightbulb is a pretty simple task that anyone can do. Changing a lightbulb at the top of a 300′ tower on the edge of a 1000′ cliff will come with a hefty price tag. Get where I’m going with this? Skill — particularly the scarcity of it — directly influences the market price. It’s simple supply and demand. Certain skills take that to an extreme.
No one in their right mind is going to pay $14,400/hr for WordPress services, but they will pay $120 to get their site back online. So don’t settle for $1 for such a task.
Application as a solopreneur
I was encouraged by Brian Gardner of StudioPress to raise my hourly rates by 50% in 2011. He said it’d weed out the riff-raff and make my life easier. I was afraid I’d lose opportunities when people were pricing me out against others. It did. I lost opportunities. I’m glad, though, because it turns out those were probably clients I didn’t want to work with. I raised my rates again. Same thing happened: I got higher quality jobs and clients who didn’t complain or want more for nothing.
According to the 80/20 rule, 20% of your clients create 80% of your problems, extra work, and misery. It’s amazing how many things the 80/20 rule apply to. So, I took the 20% best clients and made them 80% of my work by raising my rates. I was many thousands of hours into using WordPress all day, every day and that made me more valuable than someone who uses a little of this and a little of that. They struggle where purists in one platform breeze through.
Stop there – kill your rates altogether
Now that you’ve raised your rates as you’ve learned more, kill them. Hourly rates hold you back. They make you an employee again, working time to get paid.
I attended my second WordCamp Orlando in 2012 and heard a great presentation from Syed Balkhi of WPBeginner, someone I met at the first WordCamp Orlando in 2009. He was a surprise presentation on getting paid what you’re worth and a lot of his (pep) talk revolved around not posting an hourly rate and not charging by the hour.
Instead, charge by the task or project for what it’s worth when it’s done by you.
One of his more awesome points was when you give a project price and include a bunch of features, and the client comes back wanting to pull out features to save money. First, you should be selling benefits, not features. Second, it doesn’t really save money because you’re already in the mindset that your delivery of said project is worth X. Adding or removing little items isn’t going to move the needle unless it’s a qualified scope change.
He’s right
I looked back over the last 3-6 months of 2012 and it’s been pretty rare the number of times I’ve billed someone by the hour or fraction of an hour. When I did, it was often an arbitrary price the task or project was worth on the market. That price was then converted into time because they’re old school and were expecting an hourly price.
The first week of December 2102 I killed my hourly rate. Have you killed yours? How is it going? Let’s talk below.
I got very much the same advice at SOBCon and I seriously thought the people I was speaking with were joking. They were not. (Thank you, Table 2 and Ric Dragon) I”m still in the scary stages of adjusting my price point. After quoting fees over the past two months, I’ve heard silence from the vast majority of people … and it’s not unnerving, but reading things like this lets me know I’m on the right path. Thank you!
You’re welcome, Lisa. I think you’ll find that when you hit your sweet spot, you’ll be either turning away or be rejected by 80% of those coming to you.
Your best conversion success will be those coming to you via referral because you are more likely to be sent clients that fit your profile because your existing clients know what you’re worth and won’t refer riff-raff to you.
An example, referrals from Brian Gardner himself convert about 90% of the time while referrals from the StudioPress preferred dev page convert about 40% of the time.
Yes, you’re on the right track… and 2 months without anyone signing up is VERY scary. The moment you relax your constitution on who you’ll take on is the moment you get into a nightmare project. Without fail.
WOW – what a different and positive spin on rejection. This entire post, including replies, is inspiring and thought provoking – especially the rejection point which transfers to many areas of business and personal life. Thanks.
Thanks for taking a moment to comment, Kenn. Rejection (and the fear of it) is a big part of growing a business. More on mistakes and rejection soon. Thanks for stopping by.
One of the things I never really understood about the “kill your rates” idea was how to effectively apply it to building a web app. I build my clients web apps with my partner: full design, full code, full business integration. We bring a lot to the table in helping our clients realize their business goals through the app (and not just code, drop, and run).
But I really have no idea how to effectively price this based on “value”. We tried doing “project” based pricing which we thought would lead to value, but as plans changed, it became *really hard* to stick with the project pricing.
Would love any thoughts you have on this. Great post. 🙂
Thanks, Kyle. What we call “scope creep” in project pricing is one of the biggest dangers of that pricing model. I make my invoices very clear that we are doing X, Y, and Z. I’ll give and take a bit during the project.
But come to me and say that now you want a shopping cart or something that adds a totally new function like a forum, then we need to wrap up and create a new project or else I invoice for what that new function is worth.
Over the past 2 out of my 4 years under my own label, I’ve just about eliminated creep bothering me. I just charge for it.
Have you found a lot of push back by saying “we’ll need to start a new project for that”? Any tips on how to set that up correctly at the beginning? I’m wondering if I should “submodule” the app so as to only tackle and cost out the pieces. Hmm.
More pushback on that method than telling them that was definitely not in our original scope. Sending them a mini-invoice for scope change (I have a line item for that in Freshbooks) works well.
Our difference is that you sell a product and I sell a service, so it’s a little tricky to draw exact parallels, but the concept is robust.
Any reasonable client will understand what a contract is and what is included in the contract. I’ve had much more success closing contracts and spinning up a new one to cover scope changes than doing change orders.
Clients do not like getting an extra bill in the mail, regardless of whether everyone agreed on it. Depending on your client (larger companies will have to approve costs by committee) this may or may not be easier.
Interesting post.
Great post Jesse.. One of the biggest challenges for me personally, was to become comfortable with charging for my own skills. Just like you, I’d feel guilty for charging five hours for something that took me one. Maybe I was getting greedy and dishonest?
After struggling with this for a long time, I spoke to a friend who did something completely different (non tech related) and explained him how I felt.. He then told me how he always saw me working, spending time on creating my “framework” (he had no idea what that meant) and how I was always answering the phone to help my clients with their issues. Then I realised that I HAD been building a business for more then six years, improving my skills and working towards getting better clients, more challenging projects and allowing myself to travel more (go to WordCamps etc!). In fact I was greatly underselling myself by often not even charging for going the extra mile.
I bumped up my rates, got stricter towards my clients (put stuff on paper in detail, don’t call me in the weekend, and get your sh*t together if you don’t want me to bill you extra) and this worked out great. I lost a few clients (thank god) and moved on to bigger projects. I’ve become very transparant towards new clients, simply explaining that my hourly rate is this “high” because me and my partner have invested two years in a framework that will allow them to pick of features that will make their project more awesome. I don’t feel guilty about charging more, because my clients are happy, the projects are fun, and I make enough money to have some breathing room in between projects (to go to those WordCamps).
You’ve got it down, bro. We’re walking the same path… in more ways than one.
Speaking to the guilt again, when we learned what some new friends’ situation was, I felt bad that I made in a particular day what they get in 2-3 months. My wife reminded me that I’d been working for 6 years learning my trade, building very complex relationships, and working 20, 30, 50, 80 hour weeks for 5-7 days per week.
That helps keep things in perspective and I’m glad you had your conversation with your friend, too. My buddy with that perspective (other than my wife) is Phil Gerbyshak, @philgerb, up in Milwaukee. Great coach.
Great post Jesse. Thank you for the kind mention. I’m glad you liked my presentation 🙂
Absolutely, Syed. It really made me focus on what I’d learned over the years but not taken to the next level.
What a great lesson to share! Thank you for this, Jesse.
Sometimes my work includes project management and I find myself, at times, adding on work hopping it can be thrown in. I know this is wrong and it’s a great reminder that I need to steer away from that thought and focus on using high quality business partners who are not afraid to ask for what they want.
I wouldn’t want it done to me so why am I doing it to others.
Thanks again!
Thank you for taking the time to contribute to the discussion, Mikel. Very good point – I’ve had to curb my requests for those times I contract out a special feature that’s over my head and find myself wanting more. Very good reminder!
Do you bill 100% up front? Do you bill in chunks (up front or after each piece is completed)? Do you bill 100% at the end?
Good question, Mike. I bill 50% to place them in my queue and then do all of the work in a staging area. On my current host, that’s a nice user.wpengine.com site that runs super fast and can be their final home with some simple modifications upon receipt of the net 50%.
This ensures people are serious and protects me to ensure I get the net payment. About 1% bail and want their deposit back before I get to their project. I think I’ve given 4 refunds in 1036 current invoices.
Some want to pay 100% up front, but then I have a motivation issue. It’s best for all involved to split 50/50.
Mike, Jesse,
We do something very similar, part up-front, rest-later, although we split into thirds and launch on receipt of the second third, allowing the client 30 days to settle the final payment, once they’re happy any teething problems are out of the way. We find it promotes an extra level of trust, as we form longer term relationships with many of our clients through hosting and supporting their sites. A brief article and illustration I produced explains this further http://deepbluesky.com/blog/-/when-to-pay-my-web-designer_173/
When I was first starting out I struggled with this a lot. I never wanted to feel like I was ripping people off or overcharging them. Unfortunately, this lead to being taken advantage of by clients who demanded ridiculous amounts of work for very little pay.
At first I was angry and couldn’t understand why people would act this way, but eventually I realized that it was my own fault. I didn’t value my work so how could they? Once I decided to raise my rates and put my foot down on things that didn’t make sense financially or otherwise, things started to improve significantly and we haven’t looked back.
We also lost some clients and we have to turn down quite a bit of work, but believe me we do not miss any of it. This is great advice for people who are new to the business as well as those who are just starting to hit that wall where they can’t take it anymore. Sorry we didn’t get a chance to chat at WordCamp Orlando, if you ever need anything don’t hesitate to drop me a line!
Hey, yeah I saw both of you b/c of your shirts. I almost chatted it up w/ you since yours addressed freelancers (earlier article) but I wasn’t feeling THAT extroverted. 😉
It is a huge hurdle and is the best advice I can give someone just past starting out. As long as they can play ball, they should go for it.
Stay in touch – I’ll go follow your Twitter tonight.
I once found a $100 bill, which took me 2 seconds to pick up.
Read all about it in my latest post: “How I made $180.000 / hour walking around town”.
Great advice thank you Jesse 🙂
They are not paying $120 for the 30 seconds of your time, they are paying $120 for the knowledge you have of how to fix the issue.
Precisely. Another instance would be charging $350 to install WordPress as securely as possible on a shared host. Does it take me more than an hour? Heck no, but it’d take them several hours and many configurations to get it right.
You’re spot on, Tim. Thanks for dropping a comment.
I use this analogy for my high billing rates.
Back in the 80’s in New York this building had a huge steam plant that was failing every day. The new college educated “engineers” could not get a handle on it. So, in desperation they finally called the retired plumber that was there when it was installed and had maintained it for 30 years, never having a problem with it, ever. He comes in takes a look at it and leaves. Ten minutes later he comes back with a hammer. Looks at it again then wails the crap out of it with one hit. The plant comes to life and runs like new. He whips out his billing book and gives the new guys a bill for $1000.00 dollars. The kid is like wow that’s a little high for 15 minutes of work. The old man takes the bill back and then gives it back. This time itemized, $10 for the hammer and $990 for knowing where to use it. – Never discount your experience.
I don’t use allcaps often, but THAT WAS EPIC!!!!
Thanks so much for sharing that and adding to all of our understanding on what all of our hard work and experience equates to in the real world. You’re welcome here any time.
But how do you determine your flat rate for services? What’s it based on? We’re starting to price certain development services that we’ve done repeatedly with a flat rate, which we can do with some confidence because we have a good idea as to what the development will entail. But we are almost always doing something new in every project we take on. How do we price those new features? Thanks for any guidance you can give on this.
It’s somewhat nebulous. Figure what you’d pay for something done by the best in your industry… if you value your work that much. If you’re not quite there, be fair. If it takes you 1 hour to do something someone else does in 10 minutes, you can’t be too high. A sharp client will realize something is up.
I price moderately high to begin with. If I lose my shirt, it’s rare. If there was no pushback or questioning and I got it done in a time that suits me, I keep it there or raise it a bit. For example, my secure WP on a shared host is $350. It’s worth it when it withstands 99% of attacks that spread fear among new users to WP.
Thanks for asking – that was a good question.
Thanks for your answer! I guess we’ll have to test the waters, and win some and lose some until we get it right.
I’m just curious how you managed to have a phone call with a client, get the server details, do the work, write an email and send an invoice in 30 seconds.
I’m just curious if you realize everyone except you has added to the conversation with something useful.
Congratulations. You can learn from tomorrow’s lesson on learning from your mistakes.
Yes, my comment missed the point. I just found the $14K/hr to be a bit hyperbolic. The message that time taken and value delivered have very little in common is true.
Thanks, Mike. I appreciate the re-reply and I think we probably have a lot in common. It’s hard to see that in things like your first comment, so I’m very happy we got another chance. Thanks for being a reader and a contributor.
I agree to a point – it could be an example of hyperbole, though Brian Clark at Copyblogger would argue that it’s a “magnetic title” like he teaches. That said…
One of my friends from a super-epic conference I attend in Chicago most years (SOBCon – successful online businesses) told me last January that my current problem at the time was that I needed to transcend time to expand, as I was fully booked when we spoke. Therefore, I’ve upped my hosting capacity, streamlined processes, and am working on two major residual income projects. You never know when that day happens that is so terrible, you have to take 3-6 months off, even from computer time.
I love MonkeyWelder’s comment about the old man with the hammer. I might have put the lesson closer to the beginning of the story, but according to the 2:47 time spent per page, it appears most everyone stayed long enough to read the entire thing an soak in my lesson, and I assure you if people were staying for 30 seconds, I would have rearranged the order of things.
What timing!
Just an example of how one’s value can be distorted by the situation:
– I briefed a dev to build a WP plugin
– Received a quote which I accepted and paid in full upfront
– After the plugin was delivered received an additional invoice for 2x the original quote was sent through
– Was told that it took longer than expected, and that his time should be remunerated regardless of the quote
This is someone I would consider a high end dev whose time has high value.
The problem is I had a quote and would have thought that if it took longer it would be absorbed, at least in part by the dev.
Am I viewing this situation to simply?
Does someone’s value trump a quoted project that ends up taking longer?
Good question. To me, that’s unacceptable. When a dev of good moral character quotes something, they are to do one of 2 things when a project spirals:
1) stay in contact on what the labor is vs what it was expected. If you gave them scope creep, that’s on you, but they also should have communicated creep costs money. As soon as I realize an error in estimating, I stop and have a discussion. That is the only time/way an invoice should be raised.
2) don’t change the agreed to price. If it was estimated correctly, there is padding for such things. The last thing I want to do after a deposit (unless it’s a couple of hours of work on a lives site I only require a 50% deposit – period), is to go back and say the price went up.
What happened to you is 110% against the Golden Rule and is one of the greatest sins of my industry. Unfortunately, I get around 20% clients who have been run over by 1, 2, even 3 devs. One guy even claimed he lost his house.
It is a shame and something, as you point out, can be addressed with communication.
I understand scope creep and hand-on-heart know it did not happen.
I am just being punished by a ‘high value dev’ that did not quote correctly, and is not willing to absorb the cost of extra time.
That’s a shame. If you wouldn’t mind shooting me who it was via my contact form, I like to keep tabs on the troublemakers. I’m a “high value dev” but I know how to treat people well. Our industry would fare better if devs had a long-term view of client relationships.
I’d rather retain a great client than fish for new ones.
While I agree that projects should be on a fixed price basis, hourly rate has a time and a place to be. When you set the scope of the project for a specific amount of money and the client wants to make changes you could say “I’ll be glad to do that for you, for $45/hour” or whatever you come up with. This way the client has to be very objective in what he wants and values your time as a professional.
Yes, that’s still in place, for about 10x that rate. That really keeps them in line with the scope.
Absolutely. Not everyone is estabished as an expert like you’rself, so people may adjust the rates to the degree to which they’re comfortable with, based on their skill, perceived value, salesmanship, and standard or cost of living. I live in Portugal, Western Europe, so that is a very good rate for me.