Category: Books

Charge hourly vs fixed cost

There are two excellent resources available for free that discuss whether you should charge hourly or fixed cost. The first is a free online book from Harvest called The Harvest Guide to Pricing. The second is an eBook from FreshBooks called Breaking the Time Barrier.

freshbooksThe book from Harvest can be broken down into the following topics: hourly, fixed-fee, retainer, and iteration. The Harvest book appears to be saying that a client-retainer model is the best option long-term if you’re going to be doing a lot of business with a single client, and frankly I agree. It resolves a lot of issues that can pop up with a client that is doing a significant amount of work on a monthly-and-ongoing basis.

The book states that:

Retainers give you more access to the client, more flexibility in what you produce, and allow you to (somewhat) get off the exhausting new business cycle. But they don’t always last forever, depending on the quality of the work or the clients’ revenues. You can’t get too comfortable or else you’ll under-deliver, and you need to have a diverse set of clients so that you’re not too reliant on any one retainer.

The book from FreshBooks is written in the style of The E-Myth, and is even endorsed by Michael Gerber. This book definitely endorses the idea of charging for value, not time.

Anyways, I just wanted to bring these two resources to your attention!

Book Review: The Art of Pricing

Figuring out the price of products is so hard. Should you charge $5.95 for a product, or $10.95? Their are so many different areas that this will impact — for one, the survival of your company!

I was rather pleased to stumble upon a book about pricing at Borders. It is called The Art of Pricing: How to Find the Hidden Profits to Grow Your Business. At first I thought “what can be learned from a book about pricing?” but I was rather surprised.

The book uses many real-life examples. There are stores about how Ford lowered prices on higher margin products to encourage less sales of lower margin products. As a result, they significantly increased sales of premium upgrades because the value was greater.

Similarly, a restaurant example showed how you could attract different types of customers using “early bird discounts” to attract penny pincers but limiting those to sales to times when foot traffic was lower.

This is a great book that gives ideas and examples to help you price your products or services. But more than that, it gives you creative ideas for pricing that you might not think about and that could prove extremely profitable.