Over $200 per hour? Sounds impossible, doesn’t it? Or perhaps not impossible, just unlikely. Especially since you’re not a world class expert in your field, right?

Wrong!

Over $200 per hour? Sounds impossible, doesn’t it? Or perhaps not impossible, just unlikely. Especially since you’re not a world class expert in your field, right?

Wrong!

Your hourly rate doesn’t necessarily depend on your reputation, your companies brand image, your credentials or whether you have launched a thousand press releases or written umpteen books.

And I’ll prove it.

That’s not to say these things aren’t useful. I would be a fool if I claimed otherwise. However, I will show you how to earn filthy money without ANY of these factors in your favour.

At this point, you may be thinking, “Yes, of course I’d like to maximise my hourly rate but can I believe this guy?” If so, that’s fine. Because I’d expect you to be thinking that. I certainly would.

In fact I’m a complete cynic when it comes to believing extravagant claims from self-proclaimed guru’s. I want to believe what they say, but there’s something deep down inside myself that just doesn’t click. Their claims can sound false, too generalised or a little “muddy.”

Not here. I’ll give you real live examples of what I said, my mental process when speaking to the client, how I structured “the deal” and the outcome. Then how I upped my rate again. I won’t leave anything out.

Let’s get started…

The Simple Discovery that transformed my business

One day I was reading an excellent book called “Million Dollar Consulting.” The title was eye catching and I’d read some good reviews of it on amazon.com, so I bought it.

I was skimming through some of the chapters thinking, “This guy really knows his stuff. He is so in-depth - almost too much.”

Then I came across a chapter on pricing. It was to cause a revolution in my business.

It said that you’ll never earn much money if you charge an hourly rate. Hmmmm. Makes sense, I thought. It went on to say that you only have a limited number of hours in the day, so an hourly rate must be shelved where possible. This meant fixed fee pricing for a project.

Now this wouldn’t have suited some of my work, as I had already established good relationships with existing clients at a comfortable hourly rate. However, it did open the door to a different pricing structure for new clients.

My concerns were that in the past I’ve had problems with charging by the project. I drastically under-quoted many projects, resulting in me working hours and hours more than anticipated and not getting paid for it. It was so frustrating.

I also had irrational fears about losing business. They included the following:

• When I quote by the hour, it seems less than quoting some big sum of money for the whole project.
• They might prefer me to do everything on an hourly rate.
• The prices I were quoting seemed like a lot of money to me, so surely they would think the same?

As it transpired, THIS was the reality:

• Quoting by the project helps a company decide how it fits into their budget.
• Quoting a fixed price limits their financial risk. Hourly rates result in an open-ended agreement and this exposes them to project overruns. Something companies strive to avoid.
• Companies are used to dealing with larger numbers, so their perspective is different to yours or mine. Additionally, most of the time it’s not the employees money that is being spent. It’s the companies.

I decided to give it a go and try to make it work.

What follows is a discussion of my experiences using this new pricing methodology.

I know it helped me and I am confident it will help you.

My First “Proper” Fixed Fee Contract

In comes an enquiry for some software development. I take their details and estimate how long it would take to complete the project.

I used our standard estimating procedures (based on our previous experience) and reckoned that the project should take just over 5 days. Our daily rate was $680 so I quoted $3,740.

The client negotiated me down to $3,450. We signed the deal.

How long did it take me?

10 hours!

You don’t have to be a brain surgeon to calculate the hourly rate. $345 per hour! Not bad, I’ll say.

If I worked at an hourly rate (or daily rate), I would have got approximately $95 per hour, nearly a quarter of the rate I actually earned.

Wow! This was a revelation. And I didn’t do anything differently.

I hadn’t:

• increased my skills
• got more well known
• launched a massive advertising campaign

I just changed the way I price!

What factors went into this project earning me so much?

1. Quoting a price that adds some “fat” to your estimated project length. This is a form of insurance that covers you for unforeseen difficulties. If you do have a project over-run, you will still get a good hourly rate as you’ve already accounted for this.

2. Working fast. My skills have been developed over the years so I can work fast and get the job done. An hourly rate doesn’t reward skill and speed very well.

3. Using in-house time saving procedures that cut development time. We have some ready built code libraries where we can just import the required code rather than having to develop it each time.

4. Using deja.com to search for answers or posting to forums. In software development, one little problem can suck up hours of your times. A fast solution is to pick the brains of others. The result? No problems, no delay, fast completion.

5. Quoting a price that assumes you are developing everything from scratch, with no help from internal procedures, code libraries or projects.

6. Making the client believe this is a realistic price for such a project.

Intimidation costs you money

My next contract, I quoted $3,000 was for a large well-known company and I was under competition, or so I thought.

While discussing the enquirers’ details, I asked if he had any idea how much he thinks this project might cost. He said “About $900.”

I thought, “I’m going to have a problem here. His expectations are for something really cheap and he doesn’t know what this kind of project really costs.” I was intimidated.

Then I asked if I was under competition. He said, “I’ve spoken to quite a few people.” More competition – yikes! I said, “What sort of rates are they quoting?” He said, “Anything from $150 to $1500 per day.”

You can imagine my thought process at this point in time. I figured I had two problems with this enquiry:

1. His expectations were for something really cheap.
2. I was under a lot of competition, some of it really cheap.

What do I do? To quite cut my price to get the business or should I stand my ground and price accordingly.

Well, as it happened I stood my ground. I just didn't want to keep scratching around on low price projects. Otherwise, I would never earn the kind of income that would match my goals.

I quoted $3,000. If I'm honest, I cut a lot of the potential fat from this project. But I did live a little in.

The client jumped at the offer. Then it dawned on me what he had been doing all the time.

He had:

1. Put pressure on me to quote a low price by saying his expectations are for something cheap. This is a classic negotiating tactic, but I fell for it.

2. Made me believe that my chances for getting this project were small because of competition.

He was obviously a skilled and shrewd buyer. I fell for all his tactics and paid the price despite my attempts at not been influenced.

As a general rule, if your client jumps at your first price then you have priced too low.

In total, the project took 20 hours.

That works out to a healthy $152 per hour.

While this may seem a great hourly rate, I found it frustrating (I must have been getting greedy!). The client kept on changing the scope of the project, adding a couple of things here and a few things there.

I let them get away with quite a bit and I still got paid handsomely. This is an example of them eating into the “fat” you’ve added to the price.

My rate wasn’t over the magic $200 per hour but I learned some important lessons. And the average for my last two projects was now $215.

The Results of Non-Intimidation

One of my joint-venture partners introduced me to a client of his.

I discussed their needs and established that it was again a competitive bid. There were 4 other main players scrabbling for the business.

Before long, there were two left: me and the other guy.

My sales pitch was not the best I’ve done but on subsequent conversations I tried to hammer home why we are the ones to choose.

I asked my usual question, “How much is in your budget for this project?” They said, “A maximum of about $9,000.”

Wow! They actually told me, without resistance. Maybe my competitor had already quoted a price in that region.

After our meetings, I went away and tried to price the project realistically, despite the competition.

I end up giving a rough quote of $9,120, to be revised after more in-depth discussion if they decided to use me. They thought about it and came back to me 7 days later with their decision.

The deal was on!

We had another (3 hour) meeting and it transpired that some of the details were left out of the original discussion. So I had to adjust the price.

My revised price was $10,950, nearly $2,000 more than their “maximum” budget.

They gave me the immediate go ahead.

It’s strange, once someone has decided to work with you, that’s it. The momentum has fallen your way and they are increasingly unlikely to change their mind. They don’t want to agonise again over who to choose and have to have all those complicated, mind taxing meetings again.

They just pay the extra, if it arises, and get on with fighting fires in their business.

The project took me about 30 hours.

That’s $365 per hour.

Stunning Hourly Rates that Make You Weep With Joy
A client had a problem with some corrupt files that needed repairing. I established that it was critical that they receive this data.

Me: “Can’t you just take a backup” said in a nonchalant - almost as if I didn’t want the business – tone. I wasn’t being laid back, just playing the game to let them reveal how important this work was.

Client: “We can’t. The last backup was one month ago and we have a lot of critical information that we can’t get back any other way.”

Me: “What will you do if you can’t retrieve the data? We can’t guarantee retrieval.” Digging for more information…

Client: “I don’t know. It will be a real problem.”

Me: “How quickly do you need it done?”

Client: “Like yesterday!”

A few words spoken – important words – and you have opened up the clients situation. You know they have a major problem on their hands and need a fix ASAP.

Time to apply some pressure…

Me: “Well, we might be able to help. But if you want us to have a look you’d better send it over pretty quick because we’re about to start a major project which will take up all our available time.”

Client: “OK. I’ll just check with my manager and then email you the files. Thanks.”

The email arrives. I check to see if I can retrieve the data and I can. (Sometimes data retrieval can be just using Norton Utilities to fix a floppy disk.) It took me 10 minutes. Then I compose an emailing stating the cost. That took me another 8 minutes.

I get the go ahead, so I simply attach the fixed files and email them back. Takes a couple of minutes.

What did I quote for this 20 minutes of work?

$380…over $1,100 per hour!

It’s that simple.

This is where I bring it all together. Follow this and you’ll up your rate to world class expert levels.

Here’s the formula for earning over $200 per hour:

I’ve broken down each element below.

Fixed fee pricing

Avoid an hourly or daily rate when doing project work.

Speed of Execution

Halve the time it takes you to do a job and you double your hourly rate. Perhaps I’m stating the obvious but it’s a simple fact.

There are many ways to slash project times.

They include:

• Improving your level of skill. A low skilled consultant may take 5 times longer than a highly skilled pro. There is that big a difference.
• Create in-house procedures to cut project (and admin) time. Create code libraries if you write software. Develop (or borrow) knowledge bases if you provide support. Create a library of ready-to-use templates if you design websites.
• If you are stuck on something, seek help from others using discussion forums. Or search on deja.com.

Perceived Demand

People want to deal with people who are busy. If they think you have little business, they unconsciously think “Why? Are you no good?”

Act busy. Tell them you are over-run with business. It makes you look successful and reduces their negotiating power on price, because they will think “They are so busy they may not want to take on my project if I quibble on price.”

Sprinkle your conversation with comments such as “We’re so busy at the moment” or “This is the busiest month we’ve had since we started” or “We’re getting so much work in at the moment we’re having difficulty finding the time to employ more skilled staff.”

Do this before you even come to talking about price. It sets the scene nicely.

Time Constraint

Apply pressure to get them to sign up quickly. I use phrases such as “If you want us to take on your project we need to know sooner rather than later. We have quite a few pipeline cases that can come in at any time and can only have limited amount of work.”

This ties in nicely with the “busy” comments mentioned under Perceived Demand.

Customer Service

Respond to client requests as fast as possible. Exceed their expectations.

The result?

They want to deal with you and you alone.

They decide, often before being hit with a price, that you are the person for the job. So many companies fail to deliver that you’ll get noticed when you offer outrageously good customer service.

The 5 Step Action Plan to Earning Over $200 per hour

Step #1: Decide what type of work suits a fixed pricing structure
If you are just training home users, this may be a little early for you. But when you are dealing with a business, look very carefully.

They want a technical support hardware installation? Quote a fixed fee. “One hundred dollars and the job is done.” It may only take you half an hour but they don’t know that until it is done.

Need a website? Quote for the entire project. Forget an hourly rate. You won’t earn enough.

Software development? Fixed price.

And so on.

Step #2: Improve your Perceived Demand
Are you giving off the impression of being busy? Invent 10 ways to make clients believe you are the busiest consultant around.

Use these simple techniques for starters:

• Keep talking about how busy you are.
• Every bit of work that comes in, make it seem as though you are trying to slot it into a tightly packed diary.
• Don’t act as though you are about to go under if you don’t get the business. Desperation is a big turn off.
Step #3: Speed of Execution
Create an educational program to transform your skills. Block out time in your diary now for the next three months, and keep it free for self-study.

Next, think up 5 ways to cut your project work time – even if it only involves using a macro program to cut down on keystrokes, such as Macro Express.

Step #4: Develop your Time Constraints
Make up a list of 10 time constraints you can use to apply pressure to your clients.

Here are some examples

• "If you want to us to go ahead with the project, we need to know sooner rather than later. We have quite a few outstanding enquiries that may get signed up at any time."

• "It will probably take three weeks to complete the work. You said you'd like an implementation date of 1/7/2000 so that doesn't leave long. We can get the work done in time if given a prompt go ahead."

• "One of our developers is going on holiday shortly. I'm sure he could complete the work before he goes away. Otherwise, you may have to wait another two weeks before we can start.

Before you start applying these techniques, you must fully understand the client’s situation. Don't shoot yourself in the foot by overstating your claims or by applying too much pressure.

If I said to a client, "Give us the go ahead today or it will be another three weeks before we can start", knowing they can't start until at least one weeks time, then you have a problem.

Step #5: Improve on your current level of Customer Service.
Take into consideration factors such as

• Speed of returning calls
• How contactable you are
• Your timekeeping
• Being reliable

Once rated, creates an action plan to improve on each area. The cumulative effect will impress clients.

Conclusion

This special report has documented my experience on earning over $200 per hour. It is no more difficult than earning a quarter off this rate. You are doing the same work, it takes you just as long, so why not optimize your price?

Following a fixed price strategy and you will read the rewards. I should probably state here that fixed pricing only really applies to the business market.

Good luck!