April 22, 2025

Artificial Ceiling

For custom project work, I recommend pricing based on the perceived value in the mind of the client and not based on how many hours you think it might take you.

(Aside: I recommend that professionals package their expertise in a variety of ways other than custom projects, but that’s a story for another day.)

Hourly billing can seem like it’s working reasonably well if you’re really good at estimating, but there’s a huge downside:

Hourly billing places an artificial ceiling on your annual revenue.

For people I talk to in the US, this “hourly ceiling” is usually around $140,000 per year gross revenue.

$140k might not sound too bad, but after you subtract taxes, health insurance, and other self-employment expenses, it starts to feel like taking a day job might be a smarter financial move.

Yours,

—J