Rates and pricing are a huge source of concern for web developers. We’ve all felt at some point that we don’t charge enough or need to figure out how to earn more. If you do any sort of research on the subject, eventually you’ll stumble onto something called value-based pricing. The basic idea is that you deliver a fixed bid on a project that is priced in respect to the value your client will receive from having that project executed. This causes an exponential increase in what you charge.

As an example: A SEO expert pre-value-based pricing charges clients $100/hour and has average engagements of $5000. They figure out that most of their clients earn more than $50,000 a year based on their work and switch to value-based pricing with an engagement fee of $20,000. The SEO expert still does 50 hours worth of work, but now they pocket an additional $15,000.

It’s a big idea that tends to create zealots out of its practitioners and it’s not hard to see why. Who wouldn’t love to be able to quadruple their rate?

Unfortunately, it’s not all sunshine and suitcases stuffed with cash.

I ran into this concept early on in my freelancing career and it was one of the more damaging changes that I implemented. It’s difficult to estimate my losses over time, but I would say that this approach probably cost me somewhere in the ballpark of $100,000. Continue reading