Why we don't charge by the hour

Blog / February 5, 2017

We are in the business of providing value to our clients. It's always our goal to achieve success for their business through services we provide such as logo design, identity, web design and SEO and SEM. If we could, we would provide our services at no charge because we love what we do. Unfortunately, the government thinks we need to pay taxes and the places we get food don't give it out for free. And we eat a lot. Like multiple times a day.

Why do agencies charge by the hour?

It is the most common form of pricing to charge by the hour and it's a very logical model. An agency sets a rate per employee based on the type of service they provide and the cost of doing business. They then charge the client for each hour of service provided.

It's easy to understand why most agencies price this way. They get paid for exactly the work they do. Clients only pay for work that was done. Pretty straightforward, right?

So why don't we charge by the hour then?

As I mentioned at the beginning, we seek to provide value for our clients. How better to do that than by removing the worry of time as a distraction? When agencies charge by the hour, they are in a lose-lose battle with time. The way the agencies make money is by charging for more time. Although, they keep clients happy by staying under budget, it means spending less time on projects. You can see how this can cause trouble in the billing department.

Additionally, there's no secret formula for coming up with a great idea. Every client, every project and every person’s routine is different. Sometimes a great idea can come in the first hour and sometimes it takes days or weeks of brainstorming. Agency employees try to work fast and sometimes that means settling on ideas for the sake of time. It's not difficult to understand how the client loses out on this in the long term.

What do we do instead?

We, at Avidity, use what is called “value pricing”. It means that we price projects by the value we can bring to the project. While we still consider costs of production for things like printing, subcontracted services and web hosting, we base our prices on things like past experience, our expertise and knowledge on the subject. We also consider the value of the project to the client. For example, the value of a brochure for a startup is much less than an ad campaign for a national brand. 

The advantages of value pricing are clear. The client is given one price for the entire project up front. They know how much they owe and we know how much we will receive. It makes planning for the future a lot simpler all around. Also, it means we work until we have the best ideas rather than rushing to find something and spending less time focusing on your project. 

As you can see, even the way in which we set pricing is directed toward providing the most value.  The next time you start a project ask yourself, “Is my agency giving me their all?”

We'd like to hear. What are your thoughts on pricing strategy? Connect with us on Facebook or Twitter to give your two cents.

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