Lanya’s question is one we hear constantly: should I charge hourly or by the project? She’s identified the work, estimated the hours, and wants to leave room for overruns. The client is open to either approach. Seems straightforward, right?
But here’s where most freelancers get stuck. They’re choosing between two options when there’s actually a third—and far more profitable—path forward.
Key Takeaways from this Episode:
– Never charge hourly. You get punished for being efficient, and clients psychologically associate hourly rates with lower value work.
– Ask discovery questions to uncover the financial impact of the problem you’re solving, not just the tasks involved.
– Price based on value delivered, not time invested. If you solve a $300,000 problem, charging $10,000 isn’t expensive—it’s a bargain.
Why Hourly Pricing Works Against You
Let’s start with the obvious: don’t charge hourly. As Preston and Clay explain, hourly pricing creates a fundamental problem. Think about the labor market for a second. Who gets paid hourly versus salary? Hourly wages are typically associated with entry-level or less specialized work. When you charge by the hour, you’re positioning yourself in that same psychological category.
But there’s an even bigger issue. Hourly pricing punishes expertise. The better you get at your craft, the faster you can complete work—and the less you earn. You’re literally penalized for being efficient.
Clay shares the perfect illustration: the story of the ship mechanic who charges $50,000 to fix a broken cruise ship. He walks up, hits one spot with a hammer, and the ship is fixed. When the captain balks at paying $50,000 for one hammer strike, the mechanic explains that he spent years learning exactly where to hit.
The lesson? You’re not charging for the time it takes. You’re charging for the knowledge that allows you to solve the problem quickly and effectively.
The Trap of Project-Based Pricing
Okay, so if hourly is out, what about project-based pricing? It’s better, certainly. At least you’re not getting punished for efficiency. But it’s still missing something crucial.
Project-based pricing focuses on the work you’ll do—the deliverables, the tasks, the hours (estimated). But it doesn’t account for what really matters: the impact of that work on the client’s business.
This is where most freelancers leave money on the table.
The Power of Value-Based Pricing
Value-based pricing flips the entire conversation. Instead of asking “how long will this take?” you ask “what is this problem costing you?”
Consider Lanya’s SEO scenario, but taken to an extreme. Imagine a company whose articles have all dropped to page two of Google. No one visits page two. If those articles were driving significant business, this is now a major revenue problem.
Let’s say this traffic represented $300,000 in annual revenue. Suddenly, charging $1,500 (ten hours at $150/hour) seems absurd. You’re solving a $300,000 problem. Even at $10,000, you’re providing incredible value—a 30x return on investment. Where else in business can someone spend $10,000 and immediately recapture $300,000?
How to Have the Value Conversation
This all sounds great in theory, but how do you actually have this conversation without being awkward or seeming manipulative?
The key is to embed these questions naturally within your discovery process. You’re not interrogating the client—you’re genuinely trying to understand their business so you can help them better.
Start with broad questions about their business, then narrow into specifics:
**Tell me about your business.** Get context on what they do, who they serve, and how they operate.
**How do you currently get customers?** This reveals their revenue channels and dependencies.
**Why is this problem important right now?** Let them articulate the urgency and impact in their own words.
**How much of your revenue comes from this channel?** Now you’re getting specific about financial impact.
When they say “we do a million dollars a year, and $300,000 comes directly from Google,” you’ve just learned everything you need to know about pricing.
You can even go deeper into the emotional impact: “What would happen to your business if you lost that $300,000?” Their answer—layoffs, closing locations, personal financial stress—helps both of you understand what’s really at stake.
Is This Manipulative?
Some freelancers worry that this approach feels sleazy or manipulative. Preston and Clay disagree, and so do we.
If you can genuinely solve a $300,000 problem for $10,000, you’re providing exceptional value. The client who pays that $10,000 doesn’t think you’re being sleazy—they’re thrilled to write the check.
The people who complain about “high” prices are typically other freelancers in your field who charge less and are frustrated they didn’t get the job. That’s not your concern. Your concern is delivering value to clients who appreciate what you bring.
As Clay points out, when he was charging $12,000-$15,000 for websites, other freelancers were doing similar work for $1,000 or less. The difference wasn’t the website itself—it was the brand trust, sales expertise, and confidence he brought to the table. Clients valued that, and they paid for it.
Making Value-Based Pricing Work
Value-based pricing is easiest to implement when you’re working on projects directly tied to revenue—SEO, marketing campaigns, sales systems. But even for work that seems more removed from the bottom line, you can find the value connection.
If you’re a graphic designer creating daily social media posts, dig into what those posts accomplish. Are they building brand awareness that shortens sales cycles? Driving engagement that converts to email subscribers? Supporting a product launch? Every piece of work connects to business outcomes somehow.
Your job is to make that connection visible, then price accordingly.
Clay also makes an important point about supply and demand. If you’re booked solid with high demand and limited availability, charge more. If you have open capacity, you might price more competitively. But even this should be within the context of value-based pricing—adjusting your rate based on your situation, not abandoning the value framework entirely.
The Bottom Line
When clients ask about hourly versus project-based pricing, remember you have a third option: value-based pricing. This means understanding the financial impact of the problem you’re solving and pricing accordingly.
Stop thinking about how long something takes. Start thinking about what it’s worth.
Ask discovery questions that uncover business impact. Have the courage to price based on value delivered, not hours invested. And trust that clients who understand value will happily pay for results.
Because at the end of the day, if you solve a $300,000 problem for $10,000, nobody thinks you’re overcharging—they think you’re a bargain. And that’s exactly how it should be.
