 And that's really what you got to get into your head. Forget about time, think about results, and don't feel bad if you do something faster for a client. I often see people dragging projects out, and I remember I used to do this too, like dragging things out so it seems like you're working more. Nobody cares. That's something that you're creating for your client. You're creating this thing that the hours equals how much money you're supposed to be getting. But what people are paying you for is a result, and if you get that result in six weeks or in six hours, it doesn't matter. You still should be charging the same price because that is the value of that result you're giving. Hey, everyone, Jonathan from AJ & Smart here, and today I'm going to show you how to make more money, get more respect from your clients, and have less stress by not charging per hour. Let's go. For any of you who don't know me, I run an agency called AJ & Smart, or a product design studio, strategy studio. We've been around for 10 years. I've been running it for 10 years, and we've only really started to change our pricing model in maybe the last four years, and it completely changed everything for us. But let's go back to hourly pricing, which is the way we used to do it. Back four or five years ago, when a client would ask us, hey, can you do this project? Or if they would ask me, hey, can you do this project? I would go away. I think about how many hours need to be done. I would put everything together based on the hours I think we need. So I would send them a proposal, which would say UX design, 20 hours, and that's how much one hour of UX design costs, and so this is how much it's gonna cost you for the UX design. UI design, this is how many hours, et cetera, et cetera. Strategy, this is how many hours, et cetera, et cetera. And at the end, I would show them the price. Let's say all of that added up to 35,500 euro, and now they can see how all of that price breaks down. And by the way, this is how a lot of agencies and big consultancies do it. So I just assumed this is the right way to do it. What would inevitably happen, and this happens with all agencies, is the client will come back and say, actually, we don't need that many strategy days, or do you really need that many UI days, et cetera, et cetera, et cetera. And maybe they're able to get us down to like 25K, and I'm already reducing the amount of hours, and we're playing this weird game where I've basically presented, I think it's gonna take this many hours, and they've said, well, we don't think it's gonna take that many hours, and we're arguing about the price, and let's say we get it down and we do the project. In the end, maybe we need more hours, maybe we need less hours, and then we have to start rejigging things as we go. One of the biggest problems with allowing the client to remove things from the bill or from the proposal is that, and you accepting it, is that you're pretty much accepting to deliver lower quality to them than you wanted to. I actually prefer to say, well, I'm still gonna do the same amount of work because this is how we work, but we're giving you a discount because we wanna work together. I prefer to say that than to say, yeah, no problem, I'll just remove this thing which I thought was important. It's messing with your integrity if you're just allowing people to remove services from the proposal you're giving to people. After a couple of years of this, I realized it wasn't very useful. First of all, the estimate was very difficult to make with creative work or even facilitation work, exactly how many hours I would need. Sometimes I needed less time, sometimes I needed more time. Well, here's the thing. Let's say you have a workshop or you have a little bit of design work for two hours on a Monday. So you've planned in two hours on Monday, maybe 3 p.m. to 5 p.m. I have a meeting with a client, a design meeting with a client, and I just need two hours. Well, you don't just need two hours. That little slot that's happening in your day is gonna distract you for the entire day, first of all. So no matter what you do with a client, you should never be considering anything by the hour. The minimum you should be considering things with clients is per day. So at AJ and Smart, we don't think of anything less than a day. We won't do anything less than a day in terms of work because the context switching for a client is not worth it. So just at a baseline, it actually doesn't make sense to be doing things by the hour unless you're some kind of robot or running a company where the things are just really easy to do and you don't have to worry about context switching. So we started doing day rates for a while at AJ and Smart and this was better. People nitpicked a little bit less. So we would have UX design, three days, UI design, four days, da-da-da, whatever. Clients still picked out a little bit, but a lot less. And what we realized by taking this experiment or going with this experiment was that let's just take it all away, hide all of the complexity for the client. They don't care anyway and just put the price there and that worked so much better. What that also allowed us to do with AJ and Smart is just slowly increase that price based on the value we believe the client was getting from us. You've probably heard of value-based pricing and that's basically the idea. You try to imagine what's the value the client is gonna get from this and then you're charging based on that. Now, I want to clarify one thing. Value-based pricing still requires some thought and calculation. We don't do that at AJ and Smart. Our calculation of how much something should cost, so when I charge 35,000 euro to run a leadership retreat, this is not based on that's how much value I think the company is gonna get because actually I think they'll get a lot more than 35K because I work for a lot of large corporates. It's more that feels right to me. It doesn't feel too low. It doesn't feel too high, but I don't want to justify how it all adds up based on hours and based on days and based on prep work. That's just the price that I'm personally happy with charging and when too many clients are booking at that price, I raise the price and when not enough clients are booking at that price, I lower the price. So it's not about exact calculations. It's about I want to charge that much because I feel like that's the right amount and I slowly raise it until we get like the right sweet spot of amount of clients. So a couple of years ago, as a company, I decided that we're gonna stop charging by hour and stop itemizing our bills. Instead, we're just going to go for package prices. So today, this is what one of our proposals will look like. We'll just say design sprint, 130,000 euro, that's it, that's the whole thing. And what I thought would happen is that clients would come back to us and say, like what's creating that number, how many hours, how many days? They don't ask us anything. It's very rare that a client will come back to us and ask for this. For me, it's been a huge thing to move from this hourly rate thing and nitpicking with clients and trying to figure out exactly the amount of hours which nobody can versus just saying, well, if you work with me for this type of work, for this type of package, it's 130K. Anything after that, we have to talk about a new package. The question is, how do you create a package if you're doing creative work or if you're doing consulting work? You know, back in the day, day Jane Smart, we were just doing the work that clients would call us to do. And eventually, I read a book called Built to Sell. And in this book, it showed me the way to package up services in a way that clients really easily understand and you can keep things standardized pretty much. So if you wanna package things up, just look at something, look at the type of project you do and think about something that is actually always repeated. So is there like a research phase of a project that you do that's pretty much always the same? Well, maybe that could be packaged up into a research sprint with a very specific price versus all these small line items. So how do I do that? Well, I'll look at what is a generic, generic leadership retreat for me or a generic product design project, which by the way, might not always perfectly fit. And then I use that as the starting template. So the starting template for a leadership retreat for me literally says leadership retreat, 35K. But what if the client wants me to fly to Japan, which happened as well a couple of years ago? Well, I'm just gonna add on like another 5,000 euro or 10,000 euro because it's more out of the way for me, but I don't have to add new line items in. And the client just doesn't question it as much as me adding a line item that says extra travel or jet lag or something like this. It's just human nature. If you send me a receipt, if you send me a proposal and it's got all this stuff on it and it says 35K at the end, I'm gonna look for something that I don't need to make it cheaper. If you just send me the package with the price, I can't do anything about that. It's also more difficult for me to come back to you and say, hey, I don't like the price. That's more awkward. But if you just send me a massive list of things, I'm gonna come back to you and try to make that as cheap as possible. Whenever I talk about this, people ask, how do I transition current clients to actually moving away from hourly or daily to just package prices? Now, I would say it's easier as a first step with a client to move them from hourly to daily. I think that's a simple first step. If you're hourly, just understand and try to explain to the client, there is no such thing as hourly, really. If you're just doing two hours in the morning for one client, that's your whole day ruined for another client or ruined for creative work. So I would just never accept the idea that you're just gonna do one or two hours in a day. I used to do that all the time. I'd have a client call in the morning, client call in the afternoon for a different company, super tired, super unfocused and not get anything done for my own business. So the first step could be just moving them away from hourly and into daily and explaining the context switching part of it, explaining you have other clients who have to give real attention to and explaining if you have to do a three hour workshop for someone or a three hour session, you're not gonna do anything for anyone else. So they're essentially blocking the whole day for you. The second thing is really, if you have them already at the daily part, moving to packages is much easier. Telling them, look, sometimes when we do a project together, I need more time. Sometimes when we do a project together, I need less time. It's not about how much time it takes me. This is not manual labor. This is purely about your result. So this is the price of the result I'm giving you. So today, Jay and Smart, you know, if I'm doing a leadership retreat and their goal is to come out with a strategy, a strategy for the next year. And it's three days long and on the first day we get it, I'm still charging them the full price. They're not paying for my time, they're paying for my result. And that's really what you gotta get into your head. Forget about time, think about results and don't feel bad if you do something faster for a client. I often see people dragging projects out. And I remember I used to do this too, like dragging things out so it seems like you're working more. Nobody cares. That's something that you're creating for your client. You're creating this thing that the hours equals how much money you're supposed to be getting. What people are paying you for is a result. And if you get that result in six weeks or in six hours, it doesn't matter. You still should be charging the same price because that is the value of that result you're giving. So transitioning your clients is really just about changing their mindset that you're a laborer who's just doing work and kind of banging away and just like logging in the hours versus you're a knowledge worker. You're there to give them an answer to something. You're there to give them a result, not to give them your hours. And that's the mindset you need to be giving to clients so that you can make them transition from hourly or from daily to package. Some people worry, like, will I lose some clients if I do this? The answer is yes. In the short term, you might lose some clients. We were working with a really big football company here in Germany for a while. They could call us anytime and do some hourly UX design work. One day I called them up and I said, we don't do that anymore. We only do packages of six weeks. The package is this price. And they said, okay, we don't want that anymore. And it took about six to eight months for them to come back but then they booked this package and now we still work together in the way that we wanna work. You shouldn't be afraid of firing clients or letting themselves select themselves out. If you want to work with result-based pricing, just go for it. I mean, that's the only way you're gonna get it working and don't worry about clients leaving you. Honestly, one of the biggest things you can do is actually figure out how to get more and more and more clients. That's a whole other video on lead generation. I don't even know if we have one on our channel yet. But yeah, that's really gonna be the important thing there is understanding that it can happen that some clients will leave, but that's okay. You need to let them filter themselves out. And usually it's not one day to the next that I call them up and say, hey, from tomorrow on, we only work with package pricing. What I usually say, what I said back in the day was, hey, with the next booking, the next booking that you have with us, you've already booked us for three months, but the next booking I wanna tell you, we're working in a new way, you know, it's up to you. I think the transition took about six months for us at AJ & Smart from hourly to full package pricing. We haven't had an hourly rate or a day rate on an invoice for about six years now, but it did take about six months and it did take some care. And we didn't also wanna be cruel to the clients. We really liked them, but we did have to tell them that's what's gonna happen. There's no other options. We're just changing the way we work. And of course some clients did leave, but yeah, you don't have to do it overnight. If all of this was interesting to you, if the idea of charging the rates I'm talking about and doing package pricing is interesting to you, especially if you're in the facilitation space or if you're a designer who wants to move more into strategy, I've recorded a one hour free training. There's a link down below, we'll say free training and this training will show you exactly how I moved from being like an hourly rate designer to what I am today, which is actually sort of a strategy facilitator. It's down below, it's free, check it out. I hope you really like it. It's way too long for YouTube, but it's really amazing and I think you're gonna love it. I hope this advice was helpful. I hope you enjoyed the video and I have a question for the people who stuck around to the end of the video. My question to you is, did you ever have braces and what did you eat every time you got them tightened? I need help. Bye everyone.