2013-11-19

How This Freelancer Hacked His Hourly Rate

What’s your time actually worth? This experiment will get you to peak profitability.



How much is an hour of your life actually worth? It's the first question pondered by any freelancer, and arriving at an answer is seldom easy. Rather than concocting some random number based on the "market," a programmer named Joshua Gross wanted to let the invisible hand decide for itself—so he began experimenting with his prices.

The Brooklyn-based consultant launched a site called OneHour.me and started selling his time for $1 per hour, increasing the price by another dollar each time an hour was sold. In a matter of days, he was booked for 76 hours of time. Gross, who runs a design and development firm called Planetary, has been meeting with an array of startup founders and developers for the last few weeks in one- to three-hour chunks.

Gross's clients—who range from a software developer in Brooklyn to a Louisiana college student with a fashion startup—have all arrived to their sessions (usually conducted remotely) in the earliest stages of launching a tech business with a distinct need for some kind of insight. For some, it's as simple as feedback on design wireframes. Others seek answers to bigger, more existential questions, such as how to make money from their open-source tech projects.

Startup Therapy: You Can Do A Lot In An Hour Or Two

"It's felt a bit like startup therapy, which has been an interesting dynamic," says Gross. "Since it's such a short amount of time, the client and I have a chat and they talk through their position and problems. Oftentimes, they're able to actually identify their own issues and just need a push to think about the problem in another way."

With initial sessions set at $10 and below, one may expect the project's early days to be littered with half-baked ideas and missed appointments. Not so, says Gross.

"Though the price was set exceptionally low, everyone has had an unusually high amount of respect for my time," he says. "Not a single person has missed a call, even if they only paid a few dollars, and they've been insistent on staying below the allotted time, not wanting to waste my time."

Not surprisingly, the number of hours sold has dropped off as the cost has increased. Indeed, after an initial burst of bookings, the price for Gross's time has remained steady at $76 (meaning he's had that many hours purchased) for the last week or so. That may change as the project gets more attention (perhaps this article will help). In the meantime, he's busy meeting with the forty-some-odd clients that have already booked time through OneHour.me. In each one- to three-hour sprint (he says he doesn't get many two-hour bookings, for whatever reason), he works to identify the core goals and challenges of each client, doing his best to offer actionable ideas in that short time frame.

"You can often find ways to produce huge amounts of value that the client didn't necessarily consider before," he says. "For example, a client might come to you looking to redesign their site to increase conversions, meanwhile, you realize they run a fairly successful but ad-free email newsletter, already have interested advertisers, and aren't taking advantage of that potential revenue stream."

Viable Or Not, This Model Can Drive New Business

He says he plans to schedule follow-ups with each client to see how useful his input turned out to be. Their response will help him determine how successful his experiment is. Whether or not this unique stab at rethinking the typical pricing model turns out to be profitable, there's a clear advantage for Gross, who gets the experience of working with a wide range of clients in rapid-fire fashion, learning from each as he goes. Of course, each brief meeting is another connection with a new person, who may seek longer-term consulting in the future.

"I think a lot of freelancers and consultants could execute something similar to this, really only at the cost of their time, as an opportunity to expand their potential client base," he says. "It's low-risk and only requires as much time as the person cares to give to it, but seems as though it has a high potential return."

[Image: Flickr user hannaneh710]






Add New Comment

19 Comments

  • Buckmeup

    We actually built our entire marketplace on a very similar principle. On BuckMeUp.com, sellers can list their services starting at any price, buyers review the services by comparing the price they paid to the value they received. We've dubbed it the web's first merit-priced marketplace. Curious to hear your thoughts about it!

  • John

    How much is an hour of your life actually worth? It's the first question pondered by any freelancer, and arriving at an answer is seldom easy. Rather than concocting some random number based on the “market,” a programmer named Joshua Gross wanted to let the invisible hand decide for itself--so he began experimenting with his prices.

  • Dave Baldwin

    I see enormous value just from the standpoint of getting over the fear of asking for money. Starting with $1 and increasing in $1 increments is a brilliant idea.

  • John

    The fee structure you are proposing is something that I haven't thought about yet, but it is interesting. I would say that the answer depends on your field and your track record. If you are involved in something that leads to growth (like marketing or advertising, etc.) then 5% or even more would not be out of the question. You would use your results to justify your raise.

  • Buckmeup

    What we did was allow sellers to start at any price (though we initially launched w/ everyone starting at the same price); after this, previous buyers simply buck the service up or down depending on whether they felt they received value. This way, the price floats up over time, but not so far as to dissuade potential buyers.

  • Anthony Reardon

    Yes, quite interesting. I propose letting the market dictate price.

    So with this basis, you don't preclude anyone off a set fee, but rather open the door to negotiation. The model I have been working with involves doing what I do anyway, and not worrying about the fee. I put out supply to attract greater demand. From there it's just about bidding, as my limited time is obviously going to go where it is most profitable/ beneficial to me. However, when I wrap up a series of projects, I'm still in a good place to build demand and maximize my price. Lot's of benefit to letting the market dictate price, something a lot of freelancers are in better position to leverage than agencies with the big overhead and steady liabilities.

    Best, Anthony

  • John

    Michael and I take the lead up a scree-choked stream draining from the Gangjam glacier. Two hours of climbing through talus brings us to ice-blue seracs rising like frozen waveforms from the mottled glacier. An hour further, in the cirque beneath the black wall of Kailash, we begin to sink up to our knees in sun-softened snow. Michael’s altimeter reads 17,500 feet, and above us, the mountain’s north face rises in a 4,000-foot vertical thrust of glazed rock, capped by a treacherous overhanging white cornice. Jaws gone slack, we lift our eyes in awe toward the Throne of Shiva.

  • Charles T Franklin

    Thanks for sharing this! As a freelancer, I used a similar method to this. Good thing that there is a method to the madness! This way allows you to build up a portfolio of experience instead of just throwing out a fee and hoping clients take you up on it.

    It is also amazing how much you can do in an focused hour!

  • josephjrobison

    Hey Charles - did you do the exact same thing? I was contemplating putting my hourly rate public on my site, but with a countdown clock showing that my price goes up by 5% a month or something like that. 5% might be high, maybe 1%?

  • John

    So with this basis, you don't preclude anyone off a set fee, but rather open the door to negotiation. The model I have been working with involves doing what I do anyway, and not worrying about the fee. I put out supply to attract greater demand. From there it's just about bidding, as my limited time is obviously going to go where it is most profitable/ beneficial to me. However, when I wrap up a series of projects, I'm still in a good place to build demand and maximize my price. Lot's of benefit to letting the market dictate price, something a lot of freelancers are in better position to leverage than agencies with the big overhead and steady liabilities.

  • Charles T Franklin

    Thank you for asking! It was similar, but not exactly the same thing. I started off on oDesk and increased my hourly or project fee after I achieved the results or certifications of people that were getting paid higher than me (or better). I used those results when it came time to justify what I could do or why a client should pay a certain rate. I did not post my hourly rate on my own site (blog) for some time.

    The fee structure you are proposing is something that I haven't thought about yet, but it is interesting. I would say that the answer depends on your field and your track record. If you are involved in something that leads to growth (like marketing or advertising, etc.) then 5% or even more would not be out of the question. You would use your results to justify your raise.

    If you are involved in something where you provide a completed project where the results are more about the product (like graphic design, web design, etc.) I would proceed a little more cautiously and focus more on the porfolio or skillset to justify a moderate increase. If that makes sense (it did in my head...)

    Overall, I would say that no one can give the final say on fees. It all depends on who you are, how you work, and what clients want. All you can do is:
    1. Be ready to justify your work (with either stats, testimonials, or portfolio).
    2. Be flexible Every project and every client is different.
    3. Be specific with what you can offer.

    Hope this helps...

  • John

    Thanks for sharing this! As a freelancer, I used a similar method to this. Good thing that there is a method to the madness! This way allows you to build up a portfolio of experience instead of just throwing out a fee and hoping clients take you up on it.

  • josephjrobison

    Great thanks for the insight - I'm doing WordPress builds and monthly SEO services, so it relates to both growth and completed project deliverables, so a combo of the two. Good points on being ready to justify the rate with previous work, being flexible, and being specific. Do you have your business site that I can take a look at?

  • Charles T Franklin

    After you gave me such good comments, I wish that I had an incredible site to show you. The site, however is still in progress (thiscollegedropout.wordpress.c...). I also maintain profiles on oDesk and Elance, where a majority of my work comes from. I do have a website in the works, but that will be a little ways into the future.

    Feel free to keep in touch. I work with authors and I might be able to refer your services (probably the WordPress for now).

    Charles

  • John

    Thank you for asking! It was similar, but not exactly the same thing. I started off on oDesk and increased my hourly or project fee after I achieved the results or certifications of people that were getting paid higher than me (or better). I used those results when it came time to justify what I could do or why a client should pay a certain rate. I did not post my hourly rate on my own site (blog) for some time.

  • John

    I see enormous value just from the standpoint of getting over the fear of asking for money. Starting with $1 and increasing in $1 increments is a brilliant idea.