Billing: Project Based Versus Hourly Part 1: What’s the Difference?
Website design By BotEap.comBilling for many services or products, such as presentations, videos, or spectacular e-courses, can be project-based or hourly. It depends a lot on where you and your company are in terms of business growth.
Website design By BotEap.comWhat is an hour?
Website design By BotEap.comThe difference with hourly billing is that it is not necessary to define what an hour is. You will have to define how fast you work in that hour or how long it does, in terms of productivity, but you do not have to define what an hour is.
Website design By BotEap.comThe difficulty with project-based billing is defining what the project is. When they both decide what the project is, that’s what they charge. If it goes beyond the scope of the project, you charge more and put it in the contract.
Website design By BotEap.comGet started with hourly billing
Website design By BotEap.comThere is a diminishing return with hourly billing, but you have to start with hourly billing.
Website design By BotEap.comExample:
A lawyer bills by the hour. Let’s say a lawyer starts at $ 150 an hour. An attorney who is just starting out on $ 150 an hour will not be as efficient as an attorney who has been practicing law for a year. Website design By BotEap.comIf that attorney is still charging $ 150 an hour and has been in the legal industry for a year, then that attorney is falling short. They are doing more things, but billing at the same rate. Website design By BotEap.comThey have improved at what they do, but they are making less money because they are becoming more productive during that period of time. Website design By BotEap.comWhat does a lawyer? They increase their rates and that is why a junior partner bills less than a majority partner. Also, they have less influence at the junior level. Website design By BotEap.comYou give your stuff to lesser associates to do the heavy lifting, and you’re paying them in exchange for thinking time. As you get richer, you spend more time and are paid more to think. Now I have more time to think than 10 years ago. Critical thinking time is what you will finally get paid for once you hit a very high level. Website design By BotEap.comWith hourly billing, it becomes pre-emptive if you get to a point where I’ve seen many consultants pay $ 1,250 an hour, $ 700 an hour, even $ 500 an hour for a lawyer. I know lawyers who charge more. That’s a lot of money, so even saying hello to someone costs you around a dollar. Website design By BotEap.comHi, that’s a dollar. How are you? That’s a dollar and a half. How is your family? Whoa, shut up, that only cost me three bucks. We are not trying to be funny, we are being serious. Website design By BotEap.comThis is your progress with hourly billing Website design By BotEap.comHere’s how you progress with hourly billing. Another article will describe how you get into project-based billing and an example of it.
A lawyer bills by the hour. Let’s say a lawyer starts at $ 150 an hour. An attorney who is just starting out on $ 150 an hour will not be as efficient as an attorney who has been practicing law for a year. Website design By BotEap.comIf that attorney is still charging $ 150 an hour and has been in the legal industry for a year, then that attorney is falling short. They are doing more things, but billing at the same rate. Website design By BotEap.comThey have improved at what they do, but they are making less money because they are becoming more productive during that period of time. Website design By BotEap.comWhat does a lawyer? They increase their rates and that is why a junior partner bills less than a majority partner. Also, they have less influence at the junior level. Website design By BotEap.comYou give your stuff to lesser associates to do the heavy lifting, and you’re paying them in exchange for thinking time. As you get richer, you spend more time and are paid more to think. Now I have more time to think than 10 years ago. Critical thinking time is what you will finally get paid for once you hit a very high level. Website design By BotEap.comWith hourly billing, it becomes pre-emptive if you get to a point where I’ve seen many consultants pay $ 1,250 an hour, $ 700 an hour, even $ 500 an hour for a lawyer. I know lawyers who charge more. That’s a lot of money, so even saying hello to someone costs you around a dollar. Website design By BotEap.comHi, that’s a dollar. How are you? That’s a dollar and a half. How is your family? Whoa, shut up, that only cost me three bucks. We are not trying to be funny, we are being serious. Website design By BotEap.comThis is your progress with hourly billing Website design By BotEap.comHere’s how you progress with hourly billing. Another article will describe how you get into project-based billing and an example of it.