How to Stop Selling Your Time
If you run a business in the service industry, you’re probably familiar with the idea of charging by the hour. It’s something many of us do. You land a job, inform the customer how long it will take and charge £X per hour. While this may work fine if the job goes according to plan, it can cause friction if it runs over time. Customers may even become suspicious, thinking you’re deliberately trying to boost your pay.
The Downside of Charging by the Hour
- Rising costs and customer friction: Charging by the hour can quickly add up, causing tension between you and the customer. They may begin to question your efficiency or the legitimacy of the time spent on the job.
- Reduced productivity: When charging by the hour, there can be a tendency—whether conscious or not—to stretch the time. This not only frustrates customers but can also make you less productive.
- Billing disputes: You may find yourself spending time justifying your charges, which can lead to delays in payment and even disputes.
- Focus on costs, not the project: Clients may hesitate to share the full scope of their needs for fear of higher costs, limiting the potential of the project.
Charging by the hour might work well for a one-off job, but if you’re providing ongoing work or regular services, there is a better and more mutually beneficial option.
The Benefits of Charging Retainer Fees
A retainer fee is an upfront cost based on the expected work over a given period—usually a month—rather than the time it will take to complete. This approach has several advantages for both the customer and the service provider.
- Clarity and simplicity: A retainer agreement outlines the terms of service and the deliverables expected each month. For example, an IT provider might offer regular security updates, access to cloud software, a helpline and maintenance callouts. A marketing company might include blog posts, social media engagement and website maintenance.
- Predictable costs: With a retainer, both parties know what to expect—there’s no confusion over billing and the focus shifts from hourly costs to getting the job done. For small businesses with tight budgets, this can provide peace of mind as it ensures costs are predictable and manageable.
- Room for growth: A retainer fee arrangement allows for flexibility. As the client’s needs evolve, the service can grow alongside their business without the fear of escalating charges.
A Relationship Built on Trust
Businesses that have never used a retainer fee arrangement may be hesitant at first. However, for those who’ve made the switch, the benefits are clear. A retainer agreement is driven by results rather than time, fostering a stronger and more trusting relationship between provider and client. Both parties can focus on delivering quality work, rather than worrying about costs.
Do you charge by the hour? What challenges does that present for you? Have you tried working on a retainer fee? We’d love to hear about your experiences—what works best for you?
At The Last Hurdle, we understand the value of building lasting relationships with clients through clear, results-driven agreements. If you’d like to explore the benefits of retainer fees for your business, get in touch with us today.
