Are you ready to transition from hourly pricing to project-based pricing? Learn the benefits and how to make the change.
When most nonprofit consultants launch their businesses, they often start out charging hourly rates. Those rates can vary significantly based on your field, your qualifications, and your experience. For example, grant writers working hourly may charge anywhere from $25 per hour to $150 per hour (or more!).
But even at the high end of an hourly rate, there are hidden downsides to charging by the hour.
- An hourly rate caps your consulting income. There are, after all, only so many hours in a day.
- Hourly billing can lead to wild swings in your income and cash flow from month-to-month. This can make your consulting business feel less sustainable, creating stress and anxiety.
- With hourly billing, the better and more efficient you are at your work, the less money you earn—even though you are delivering the same benefit to your clients!
Whether you want to earn more (or work less), the challenge then is to find a way to stop trading hours for dollars. The answer: project-based pricing.
What Is Project Based Pricing?
Project based pricing means performing a defined service or services for a set fee that is agreed upon in advance. Many small businesses and consultants use project-based pricing for services such as strategic planning, fundraising, grant writing, marketing, and design.
With project based pricing, instead of trading hours for dollars, you are trading your unique expertise for a fair fee that benefits you and your client.
Project Based Pricing Benefits
For nonprofits and the consultants who serve them, project-based billing is a win-win.
Project-based billing enables nonprofit organizations to tap into expert support they otherwise might not be able to afford. It also gives nonprofit leaders the ability to best manage and stay within their budgets. When contracting for project-based work with skilled consultants, nonprofits can rest assured that deliverables will get met (which, in the nonprofit world, is priceless).
For nonprofit consultants, there are just as many benefits. With project based pricing, you can get:
- More flexibility and predictability in your workload.
- Greater clarity with clients on expectations and outcomes.
- Steadier monthly income and cash flow.
- Far less time spent on paperwork and invoicing.
- Higher perceived value for your services, with higher pay to match.
- The ability to reward yourself for working smarter and more efficiently.
Are you ready to make the switch?
Switching to project based pricing brings incredible benefits, but it does take some time and work upfront.
When you’re hustling to get new clients (and then impress them), it can be hard to find time to step back and rethink traditional hours-based billing practices. As your client list grows, you quickly end up on a treadmill of tracking hours and managing client deadlines, all while chasing contracts and invoices. Even once you’ve secured a monthly retainer, you might quickly realize you’re working far more hours than anticipated—with no end in sight.
Finding time to reassess how you bill—much less figure out how to talk to clients about it—always seems like a task for “another day.”
But the truth is, there’s never a bad time to improve how you work with clients. And that’s what project-based billing can help you do.
How to Make the Transition to Project Based Billing
To get started with project based billing, you will need to outline a few things:
- Your core services: Project based pricing is easiest when you develop and price a set of core services in advance. For example, many fundraising consultants charge flat fees for writing a boilerplate grant proposal or grant template or providing monthly fundraising coaching calls and feedback. If you’re just starting the transition to project-based billing, it may help to start with 2-3 core services that not only have high demand, but that you most enjoy doing.
- Pricing your services: When pricing project work, you’ll need to start with a rough idea of how many hours will go into the project and the income you want to make for that amount of time and effort. Be prepared, it can take some trial and error to find your pricing sweet spot. For example, I helped one of the alums of our One-on-One Nonprofit Consulting Boot Camp started a copywriting business serving nonprofit organizations and consultants. In her first go at pricing a project, she significantly underestimated the amount of time it would take (and the value she would provide). But she diligently tracked her hours on different projects, conducted market research, and set long-term goals for reaching “expert pricing” for different types of copywriting projects. Within a few months, she was easily commanding that expert pricing.
- Communicating to clients: Of course, it’s easy to implement project based pricing with new rather than existing clients. But that doesn’t mean you shouldn’t change the way you bill current clients. The key is communicating by focusing on your value. Think of it this way: your current clients already know and appreciate the incredible value you bring to their organizations—and are eager to keep benefiting from your expertise. For current clients, reach out at least 2-3 months before your contract expires. Emphasize how much you value the organization as a client and how you want to be able to continue to prioritize their work—and that the transition you’re making to project-based billing will enable you to do just that.
If you’re looking for more customized assistance in making the switch from hourly billing to project based pricing, we offer on-demand consultations. We can help you find the right pricing for your consulting services and develop an individualized strategy for how to talk to each of your clients (and find more!).