Your hourly rate puts you in opposition with your client because you get penalized for efficiency. It sets the wrong incentives – you want to take more time to earn more, your client wants the exact opposite.

An hourly rate overlooks your highest value: the results you deliver. Plus, you earn less as you gain expertise simply because you accomplish things faster.

Your Hourly Rate Creates Conflict

Top four ways your hourly rate puts you and your client at odds.

1. Tug of war Your client wants the work quickly completed to lower the cost. On the other hand, you earn more money when you take more time. With an hourly rate you’re rewarded for inefficiency. If you were rewarded for speed, while maintaining quality, how would your approach differ?

2. Time tracking With an hourly rate, you calculate all your costs and diligently track every minute of your time. Your client doesn’t really care about those things. Clients are primarily concerned with the end result. How much time do you spend tracking hours and billing for your 
time? What if you stopped tracking time?

3. Underestimate your time Projects often require more time than expected to produce quality work. This causes you to worry about going over budget and your client’s response. What if your fees were all-inclusive and removed these concerns?

4. Overlooks expertise As the years roll by, your process speeds up. If that’s the case, then you earn less for the same work done. Your hourly rate puts a cap on your income since time is finite. How would your pricing change if you emphasized your expertise, rather than costs and time? When clients are charged an hourly rate, they often avoid reaching out to you when they run into a problem because of the additional cost. When they do contact you, the problem has escalated and fixing it costs more than if they had contacted you sooner.

Loren Fogelman is founder and CEO of Business Success Solution.

Register for the related webinar with Loren here: Stop Competing on Price: Confidently Answer the "What Your Hourly Rate" Question