I sent this email to a couple friends this morning and thought it would make a good TFF post. To my knowledge, the author has made this book freely available to anyone who wants to read it. The download link is public and published in the book itself. It's an easy read at only 70 pages.
Mike McDerment founded the online invoicing company called Freshbooks. Freshbooks grew rapidly over the first ten years and has since closed about $150M in venture capital. That's certainly some kind of success. It's been a *long* time since reading it, but I absolutely recall using the same approach when selling my own consulting services. The basic idea is that almost every white collar gig worker sells time at an hourly rate. CPAs, attorneys, web designers, coders, consultants - everyone. It's natural.
Mike discusses several inherent problems in this model including the obvious one. Everyone has a limited number of billable hours in the month which caps your income. The only workarounds are charging a higher hourly rate, working overtime or subcontracting. Although each approach is valid, all of them have different shortcomings.
His #1 solution was selling services as a bundle.
It could be a monthly fixed rate plan, it could be a slate of services packaged together, it could be the Dollar Value Meal at McDonald's. All exactly the same thing. In my case, I switched from charging $250 / hour for route balancing consulting work to billing $2,000 per vehicle. That means that a route balancing project for a ten truck operation is a $20,000 project. Projects for previous clients are discounted to $1,500 per vehicle which is a HUGE reduction in their eyes and encourages repeat customers.
But easily affordable to me since on average it takes only 10 - 20 hours to complete the project and provide the client deliverables. Some do take longer. Occasionally as much as 35 - 40 hours. That drops my hourly rate from $1,000 - $2,000 / hour to something like $500 / hour. OTOH, larger projects really don't take any longer, so everything kind of balances out.
That's a bit of a guesstimate since I don't actually track hours. No client has ever asked how many hours it takes to complete since they couldn't care less. Nor do they care who's doing the work. That's a BIG difference vs. hiring a tax accountant for $300 per hour and hearing them say "Yeah, my assistant is going to do all the work." Clients expect a tremendous level of professional expertise personally delivered to justify the high hourly rate. I can pay someone $50 - 75 / hour to get this work completed and everyone's a happy camper all around.
How is that possible?
The trick is I'm selling annual savings due to greatly increased route efficiency. It's anywhere between 5x - 10x annually vs. the one-time project cost. That $20K invoice saves them $100K - $200K annually. Year after year. They are buying a result, not my personal time.
Thank you for reading this book. This book was designed to help you unlock your true earning potential. If you’ve found this book valuable, please share it with someone you know and visit FreshBooks.com/BreakingtheTimeBarrier where you can pay what you believe it is worth to you and your business.
Mike McDerment founded the online invoicing company called Freshbooks. Freshbooks grew rapidly over the first ten years and has since closed about $150M in venture capital. That's certainly some kind of success. It's been a *long* time since reading it, but I absolutely recall using the same approach when selling my own consulting services. The basic idea is that almost every white collar gig worker sells time at an hourly rate. CPAs, attorneys, web designers, coders, consultants - everyone. It's natural.
Mike discusses several inherent problems in this model including the obvious one. Everyone has a limited number of billable hours in the month which caps your income. The only workarounds are charging a higher hourly rate, working overtime or subcontracting. Although each approach is valid, all of them have different shortcomings.
His #1 solution was selling services as a bundle.
It could be a monthly fixed rate plan, it could be a slate of services packaged together, it could be the Dollar Value Meal at McDonald's. All exactly the same thing. In my case, I switched from charging $250 / hour for route balancing consulting work to billing $2,000 per vehicle. That means that a route balancing project for a ten truck operation is a $20,000 project. Projects for previous clients are discounted to $1,500 per vehicle which is a HUGE reduction in their eyes and encourages repeat customers.
But easily affordable to me since on average it takes only 10 - 20 hours to complete the project and provide the client deliverables. Some do take longer. Occasionally as much as 35 - 40 hours. That drops my hourly rate from $1,000 - $2,000 / hour to something like $500 / hour. OTOH, larger projects really don't take any longer, so everything kind of balances out.
That's a bit of a guesstimate since I don't actually track hours. No client has ever asked how many hours it takes to complete since they couldn't care less. Nor do they care who's doing the work. That's a BIG difference vs. hiring a tax accountant for $300 per hour and hearing them say "Yeah, my assistant is going to do all the work." Clients expect a tremendous level of professional expertise personally delivered to justify the high hourly rate. I can pay someone $50 - 75 / hour to get this work completed and everyone's a happy camper all around.
How is that possible?
The trick is I'm selling annual savings due to greatly increased route efficiency. It's anywhere between 5x - 10x annually vs. the one-time project cost. That $20K invoice saves them $100K - $200K annually. Year after year. They are buying a result, not my personal time.
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