Standards & Structure
Chris Out
You can build a price in two ways.
You add up your hours and put a rate next to them. Or you start with the question of what the problem is currently costing the client.
That second conversation only works if the outcome is concrete and measurable. Otherwise, you're still pulling a number out of thin air.
Hourly pricing has a fundamental problem: the better you get, the less you earn.
The better you get, the faster you solve a problem. On an hourly rate, working faster often means billing less. That's a strange system when the client is paying for your experience.
Clients know this too. They see the rate, estimate the hours and compare. The conversation quickly becomes about who is cheapest, not who delivers the best result. And 'who is cheapest' is a competition you don't want to win, because the cheapest option always loses as soon as someone even cheaper comes along.
Value-based pricing breaks that pattern. Not by putting a higher rate in front of the client and hoping they accept it, but by having a different conversation. From 'what does it cost?' to 'what does it deliver?'
Value-based pricing doesn't start with the rate. It starts with understanding what the problem is costing the client.
'What is this problem costing you right now?' 'What changes once it's solved?' 'What is that change worth over the next twelve months?'
If the client can't answer those questions, you're not ready to talk about price yet. You first need to make the problem clearer.
That's the difference. It's not that you ask for more, but that you ask in the context of what it delivers. The client does the calculation with you. And once the client has calculated the value themselves, your price is no longer an obstacle. It becomes an investment decision.
The conversation feels different too. You're not defending why you charge that amount. You're calculating what the client gets in return. That puts you in a fundamentally different position in the conversation. This is the H principle in the SHARP framework: Hold Your Ground, from value.
What the problem is currently costing the client. In money or time, preferably both. If they don't know, help them calculate it. This is the conversation before the pricing conversation, and it's the most important part of the entire process.
What the concrete outcome is. Not 'better marketing,' but 'more qualified leads per month' or 'a shorter sales cycle from six weeks to three.' The more concrete the outcome, the easier it becomes for the client to calculate the value themselves. Vagueness is the enemy of value-based pricing.
What your reference point is. Not the competitor. Not 'what the market charges.' Your reference point is the value you deliver. If you know that value and the client knows it too, the pricing negotiation becomes different. The client is negotiating over a percentage of their own profit, not over your hourly rate.
Take one current client. Calculate what the problem you solve for them costs if you don't solve it. Not what you deliver, but what it produces. Ask them if you don't know.
Then ask yourself: if you showed that number in your next conversation, what would change about the way you present the price?
That's the test. Not a new pricing model. No major decision. Just have one conversation differently and see how the client responds.
For more on how to structure your pricing: pricing your services and the retainer model.
Want to make your pricing concrete and understand which conversation is needed to support it? That's what we do in the Standards Assessment.
What Is Value-Based Pricing for an Agency?
Pricing services based on what they deliver for the client, not on how many hours they take. You start the conversation with what the problem is costing the client, calculate the value of the outcome together and present your rate as a percentage of that value. The client is then negotiating over their own return, not your hourly rate. That's a fundamentally different conversation.
How Do You Have a Value-Based Pricing Conversation?
Three steps. First: calculate what the problem is currently costing the client, in money or time. Second: make the outcome concrete in measurable terms, not 'better marketing' but '30 percent more qualified leads per month.' Third: present your rate as a fraction of the value you deliver. Once the client has calculated their own profit, your price becomes an investment decision, not a cost.
Is Value-Based Pricing Always Better Than Hourly Pricing?
For services with a demonstrable result, almost always. For exploratory or unclear work where the outcome is genuinely uncertain, hourly pricing can sometimes be the fairer choice for both parties. If you can define and quantify the outcome, price based on value. If you can't, price based on hours and create more clarity before taking the next step.
Standards & Structure
Growth Without Chaos
Standards & Structure
Leadership & Enforcement
