January 26, 2026

Reader questions re Breaking Free from Hourly Billing

Fellow list member Matthias Güntert replied to my recent email about breaking free from hourly billing with a couple of questions (shared with permission):

Hi Jonathan,

I’ve been following your newsletter, and it’s been very useful, not because it motivates me, but because it’s forcing me to dismantle the assumptions I’ve been operating under. Thank you very much.

I founded KloudShift last year, and I’m currently balancing one cash-flow client with two SaaS products that I am building on the side. The goal isn’t to “escape consulting,” but to build leverage — products scale, hours don’t.

The constraint I’m wrestling with now: how to transition from a single-customer services model to a portfolio where product revenue matters and increase revenue & income. I’d love to hear how others have overcome this barrier.

Also, from your e-mail, I didn’t understand why breaking free from hourly billing is a good thing.

If I write software to implement features for my customer, I am continuously facing many uncertainties that impact the effort I have to put into developing it.

These uncertainties would become my risk (potentially lowering my income), if I’d move away from hourly billing and charge e.g. per feature.

Why would I still want to price/bill per feature?

Kind regards, Matthias

The two questions I see here are as follows:
(paraphrased slightly):

How do I transition from a single-customer services model to a portfolio where product revenue matters and increase overall revenue & income?
I didn’t understand why breaking free from hourly billing is a good thing. Why would I want to price per feature?

I’ll answer the second question first:

I didn’t understand why breaking free from hourly billing is a good thing. Why would I want to price per feature?

I wouldn’t switch from billing by the hour to pricing per feature.

I’d switch to pricing based on the client’s desired outcome.

I exaggerate this concept for comic effect in Ditcherville 14:

How Much For A Like Button?

TL;DR: Price results, not features.

This approach requires you engage with the client less like a technical expert and more like a fellow businessperson.

For more, check out my stuff on The Why Conversation.

Now, back to the first question...

How do I transition from a single-customer services model to a portfolio where product revenue matters and increase overall revenue & income?

There’s no one right answer to this question, but I might be able to help frame it for you.

Here’s my understanding of the question:

Your desired future state is to be making more money than you are now, mainly or completely from one or more products instead of from services.
You have a whale client now that is providing the cash flow you need to pay yourself enough to support your lifestyle and fund your product ambitions.

If I have this right, you’re essentially running two businesses at the same time.

This is very hard.

Also, you’re carrying very high risks:

All or most of your cash flow is coming from a single client. Lose them, and you’re probably in big financial trouble.
Product start-ups have an insanely high failure rate. You might need to try fifty before one takes off.

My general advice:

Secure stable, predictable, and sufficient cash flow by any means necessary, so you have time to place lots and lots of small bets on product side-projects.

Hope this helps!

Thanks to MG for the permission to share, and the kind words about the mailing list! :-)

Yours,

—J