July 10, 2018

Reader question: “Isn’t selling blocks of time essentially the same thing as billing hourly?”

Reader Kyle Bowen replied to a recent message I sent with the subject “3 ways to try to ditch hourly with existing clients”. In that message, I suggested that selling blocks of time might make sense under certain circumstances.

Here is Kyle’s question (shared with permission):

Hi Jonathan, I’m always curious when I see people doing option 2 (selling blocks of time). How is this different than hourly billing? I suppose there aren’t any surprise overages, but couldn’t the client be surprised to learn that their block of time is up “so soon”? A bit surprised to see you advocating what appears to be hourly billing by another name. Kyle

As I said in the original message, none of the three options I proposed are great. They are last ditch efforts. But still, it’s a fair question. Isn’t selling blocks of time essentially the same thing as billing hourly?

No, not exactly.

Selling blocks of time is far from my favorite pricing approach, but it has several non-trivial advantages over billing hourly in arrears.

Here are three:

The client is forced to make bigger - and therefore more thoughtful - buying decisions.
You get paid in advance which means you’ll never have to chase the client for late payments (or get stiffed on your last invoice).
If the client is dragging their feet with their side of the project (e.g., client is slow to deliver login info or product photos or sales copy) you aren’t thrown into a cash flow crunch because you are blocked and can’t put in hours.

Thanks for sharing, Kyle!

Yours,

—J

P.S. Are you ready to take your business to the next level? I have one opening left in my private coaching. It’s not for everyone, but it might be for you -> jonathanstark.com/coaching