There is a debate that comes round every so often in marketing circles, and it flared up again at a couple of events I went to over the winter. Should you charge for your time, or for the value you create? The people arguing for value pricing tend to say it with the certainty of someone who has read one blog post about it.
I think the real position is more awkward than either camp admits.
Time-based fees are easy to understand and easy to sell. A day rate, a retainer of so many hours, an invoice at the end of the month. The client knows what they are buying and can compare quotes. The trouble is that it rewards being slow. If you get faster and better at something, you earn less for the same result, which is a strange incentive to build a business on. It also caps you at the number of hours in a week.
Value pricing sounds better on paper. You charge a fee tied to what the work is worth to the client, not the effort it took you. A campaign that adds meaningful revenue is worth more than a fixed number of hours, so price accordingly.
Then reality turns up. To price on value you have to agree what the value is, in advance, with someone who often has no idea. You need a clean way to attribute the outcome to your work rather than the season, the product, the wider market, or the thing their competitor did badly. In digital marketing that attribution is genuinely hard, and anyone telling you it is simple is selling something.
A few things I have come to believe:
- Small and one-off jobs suit time or fixed fees. There is not enough shared history to price on value, and the client wants a predictable number.
- Longer relationships can move towards value, but only once there is trust and a shared view of what good looks like. That takes months, not a kick-off meeting.
- Whatever the model, the client is really buying a reduction in risk and uncertainty. They want to stop worrying about a problem. Price signals how confident you are that you can make it stop.
The uncomfortable bit is that most sensible arrangements end up as a blend. A base fee that keeps the lights on, and some element tied to a result everyone can actually agree on. Not clean, not ideologically pure, but it survives contact with a real client and a real invoice.
I do not think there is a right answer here, and I am suspicious of anyone who says there is. The people who sell the certainty are usually the ones who have never had to defend the invoice.
