What is your time worth? Often, freelancers in web development or small design agencies focus on an hourly rate. Value-based pricing is a better alternative.

Here’s why you should switch to value-based pricing, and how to make it happen.

Value-Based Pricing Versus Hourly Rates

An hourly rate is a simplistic way to value your work. Add up the hours it takes to get it done, multiply it by the rate, and there’s your income for that project. In web development and in design agency settings, we’re used to looking at things based on the time they take to complete.

But what happens if your project takes longer than expected?


a) work at an unsustainable pace to make your time worthwhile, or b) expend more hours than you had planned, which isn’t going to do much for your bottom line.

If you look at the overall value of your work, it can add up to more than your hourly rate would.

And thinking like this frees you from the constraints of watching the clock and trying to make sure you are getting enough dollars per hour.

Value-based pricing is based on less tangible considerations than a cost-based, hourly model. In web development and design agency work, it takes a bit more effort to pin down what your value lies in. The result, however, is that people are willing to pay for the quality and reputation associated with your work instead of saying yes or no to what you charge per hour.

Value-Based Pricing as a Small Business

When you commoditize what you are offering, setting it up as an hourly rate or cost-based value to your customers, you are boxing yourself in as a freelancer or small business owner.

If your value is high but the hourly work itself is not significant, people who might otherwise pay you what you are worth could balk at what you’re asking for on an hourly basis.

The client would receive the same result, but valuing it in hourly terms can devalue it in the eyes of a customer who sees you as a commodity and not a service.

The person who offers the lowest price is not always the best person for the job. But when everyone is on the same time-based playing field, that low hourly rate can be attractive.

As a freelancer or design agency owner, focus on your deliverables and what they are worth. This shows your clients that they are getting something good for their money and also allows you to provide an expected timeline, but without tying your worth to the clock.

Value-Based Pricing and Your Competitors

If you are already using a cost-based price or hourly rate, it can feel challenging to switch to value-based pricing. To do this successfully, be aware of what a customer is willing to pay. Strike a balance between paying yourself fairly and charging what a customer will readily accept.

It can be tricky to nail down. Unlike a cost-based value, this involves more psychology and how well you know your target market.

You need to be aware of what competitors are charging. Not so that you can tie your value to their pricing, but to know what the other options are for your customers if they choose to not go with your offering.

Adopt the perspective of a potential customer to value what the differences are between you and your competitors, both good and bad.

When you research your competitors, you can see where your product or service has advantages, versus that of your competitors. This is where your value lies. Promote this.

At the same time, you are likely to uncover deficiencies in what you do, which is where your competitors’ value lies. Ultimately, you can use this information to set yourself apart. Market based on what you do well and leave the rest behind.

In the meantime, improve your overall offering by working on the parts that are lacking.

The Bottom Line

What you can provide per hour or per project is important, but it isn’t the summation of your abilities.

When you implement value-based pricing, you are asking for a fair rate for everything you do, including your past experiences and learned skills and efforts. It’s not just what you are offering now in terms of hours and outcomes, but the value you offer on the whole.

With only so many hours in the day, sticking to time-based pricing means you can never grow beyond that 24-hour clock. Master the art of value-based pricing, and your creativity, skills, and commitment will pay off.