Marketers: stop selling your hours
Ditching the clock: Why hourly billing fails marketers and clients
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TikTok heads to the Supreme Court today to try to stop their ban. The Supreme Court will purely decide whether the ban law is constitutional and will not consider the merits of the ban itself. Given this reality, we can expect TikTok to leave the US on January 19th. Read my previous newsletter on this topic here.
I have met too many digital marketing consultants who charge by the hour. This time-based billing model, a relic of other industries, fundamentally clashes with the nature of digital marketing work and undermines the very value marketers strive to deliver.
A key reason for this disconnect is the inherent variability of digital marketers' operations; each has a unique rhythm and pace of work.
Should hours ever be sold?
Some might argue that many professional services shouldn’t be billed hourly, but the fallacy of the billable hour is particularly glaring in digital marketing. ( I am wading into that debate, not the overall professional services model.)
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Unlike hourly workers who perform repetitive tasks, digital marketers engage in complex cognitive processes that require analytical skills, creative thinking, and strategic foresight.
Some excel at rapid-fire brainstorming, generating many creative ideas in minutes. Others thrive on deep dives into data, meticulously analyzing every metric before arriving at a data-driven strategy.
To underscore this further, if digital marketing can be packaged into repetitive tasks, there’s no compelling reason why AI cannot be the resource for this effort. Indeed, some aspects of digital marketing will be outsourced to AI, but I believe the cognitive and creative elements will never be. If all creativity is left to AI, then no creativity is left. AI doesn’t create; it expounds and improves based on existing knowledge.
Compare two marketers
Consider two consultants tasked with developing an SEO strategy for a new e-commerce brand.
Consultant A, a user empathy savant with an intuitive grasp of programmatic SEO, crafts a brilliant strategy in a single hour with captivating content ideas and a targeted audience approach.
Consultant B, a meticulous analyst, spends four hours poring over competitor data, demographic trends, and platform algorithms before arriving at a comparable strategy.
(*Comparable is defined as achieving the client’s goals rather than a comparable strategy.)
Should Consultant B, who invests four times the effort, command a fee four times higher? Not necessarily. The client's primary goal is a successful digital effort that drives revenue. If both consultants deliver equally effective strategies, the time invested becomes a secondary consideration.
Perils of time-based billing
Charging by the hour creates a system fraught with perverse incentives. Marketers who work quickly and efficiently to deliver exceptional results are effectively penalized for their proficiency.
Conversely, those who take longer are inadvertently rewarded, creating a subconscious temptation to prolong projects unnecessarily. This leads to inflated client costs and fosters a culture where time, rather than value, becomes the success metric.
Furthermore, the constant pressure to track time can stifle the creativity at the heart of digital marketing. Imagine a copywriter constantly glancing at the clock while crafting compelling ad copy or a graphic designer meticulously logging every minute spent designing a captivating landing page. This fragmented focus disrupts the flow state, a mental zone where imagination flourishes and innovative ideas are born.
I am picking on hours, but any billable asset that’s not value will have the same shortcomings. A copywriter paid by the word will inadvertently inflate word counts, social media managers paid by engagement rate, and even paid marketers paid on a percentage of spend will lead to costs not in line with value.
Embracing value
The actual value of digital marketing lies not in the hours expended but in the tangible benefits delivered to the client. Whether it's increased revenue, higher conversion rates, improved brand awareness, or enhanced customer engagement, these outcomes are the ultimate measure of a digital marketer's success. By shifting the focus from time to value, marketers can align their interests with those of their clients, fostering a true partnership built on shared goals and mutual success.
Value also unlocks greater earning potential for the consultant. Consider an SEO consultant who helps a business build a billion-dollar SEO channel by developing the product strategy, overseeing the engineers, and creating the reporting. This same consultant could have spent hours building a channel to only drive hundreds of thousands of dollars for another business.
The hours are the same in both cases, but the value is vastly different. By focusing on the quantifiable results, the marketer can command a fee that reflects the true impact of their expertise. In the billion-dollar example, some SEO consultants would be justified in earning a seven-figure fee for this work.
Benefits of value-based pricing
Moving away from hourly billing has profound implications beyond financial considerations. Freed from the constraints of the billable hour, marketers can fully dedicate themselves to achieving client objectives, fostering a more profound sense of purpose and professional fulfillment. No one likes to look at the clock while they work.
Recognizing that each marketer works at a different pace allows for greater self-awareness and the freedom to leverage individual strengths, leading to more effective and personalized solutions.
Value-based pricing fosters transparency and demonstrates a commitment to client success. It builds trust and lays the foundation for long-term partnerships.
By shifting the focus from time to value, digital marketers can position themselves as strategic advisors and trusted partners, enhancing the perceived value of their expertise and raising the industry's standards. As long as people in the industry charge by the hour, clients will ask how many hours they will get for an engagement.
Value-driven landscape
Before this paradigm shift, there is still a way to go.
Marketers must become adept at articulating their value proposition and demonstrating the tangible benefits they offer. Clients, in turn, must recognize that the actual cost of digital marketing lies not in the hours invested but in the transformative impact of the strategies implemented.
Many marketers don’t feel empowered to make this shift because clients are habituated to hiring consultants by the hour. With the correct explanation, clients will realize they will only benefit from a value-based engagement.
If you charge for hours now, try pitching value on your next prospect call. You might be surprised that it’s not as complex as you thought.
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Good post. I see this approach becoming more and more popular. Can you share what pricing packages you have and how you decide whether a potential customer is a good fit?
How do you show value initially, is it linked with the success of SEO campaign and you charge at the end or is it charge per task ?