How we moved from hourly to fixed pricing

Jupiter and the Giraffe established itself in 2016. Since then, we priced ourselves at an hourly rate. A rate for development and a separate rate for design. We were convinced that it offered the best of both worlds; low prices that the client loved because they only paid for the work we produced and (for us) a reduction of trigger-happy requests from the client – they only asked for what they believed was necessary. One of the reasons we were wary of using fixed pricing when we first started out was that we knew we needed to accommodate the many unknowns in a project. This meant we often had to quadruple what we thought it would cost if we charged at an hourly rate. That felt very uncomfortable at the time so we would often use this as an argument to the client of why we felt hourly rates worked best.

Two years in and with the experience gained from working on many varied projects within a diverse client portfolio, we soon began to realise the downside to charging hourly. We came to the conclusion that although our original inclination to charging hourly had its positives, it also severely undermined us as experts in our field and punished us for our efficiency. Here’s why.

The simplest way to describe this is that if we were feeling particularly productive one day, we have been known to set up a WordPress website in just four hours. If someone charging the same rate did not have the expertise or efficiency to do this in this amount of time, but took two days, they would be paid a lot more, whereas we would just charge for two hours. “But why don’t you just charge more per hour”, I hear you ask? To illustrate this, let’s take a website design. With a few workshops under our belt with a client, we could spend weeks perfecting the design; the right font choice, the perfect complimentary colours, the perfect layout. We could easily charge tens of thousands for a website with that amount of work and that’s just for the design alone. On the flip side, we’ve been in an initial one hour preliminary meeting where in this meeting, we have scribbled what became the final design for Boombocs’ website. We still have that initial sketch somewhere! Although, on this piece of work, we did do many iterations to come to the final design, this is indeed an occasion where our experience really can allow us to create great work in just a short amount of time. Should we really be punished for this for when it takes so little time? It takes years of experience to hone this skill, the education, the tireless hours of study and craftsmanship to get to this point and we need to factor that into our rate. We began to see a hole in our hourly logic.

Since then, we charge with what we believe to be ‘value based’. This means we tailor our prices to how much value our work is likely to bring the client. Nike is likely willing to pay millions for their branding because they are a world recognisable brand and will gain a lot of exposure for their campaigns. This doesn’t mean the campaign is any better than what someone else could produce. The branding agency is also not likely to charge this sort of money to their other clients. Here, it’s priced on value.

We also believe setting a fixed rate means we can offer a process and a promise that the work we produce is of the best calibre. We’ve experimented with a tier system that offers the client different options at different price brackets that will result in the same product but with shortcuts made so that we can offer it for less and more advanced features can be added at a cost. We found the client often doesn’t have the reasonable amount of technical expertise to understand what paying more will get them and the lower tiers will of course get them what they desire so will choose the cheaper option. During the production of work, working to this lower tier, we felt like we were cheating them. That we KNEW they had made the wrong choice. We were transparent in why they should pay for certain features but they opted out so this is something we had to reconcile with. We WANT to produce the best work we possibly can but when we want to go that extra mile, we often thought “the client hasn’t paid for that service” so would hold back. We’re proud of every piece of work we’ve done but sometimes we’ve had to restrict our output for financial reasons given the client chose not to receive that service.

One last point is that we hate saying “no” to things. We never want to let the client down and we want to be as accommodating as possible. This means if a new request comes in or a change at the last-minute needs to be made, we should always answer “yes” with a smile on our face. The only way we can guarantee this is by pricing ourselves and our expertise at a reasonable rate. This promise, along with our guarantee for the best means we now price ourselves at a fixed fee whereby we follow a formula in the way we produce work. We scope out what the client needs based on our findings and we decide what we need to do to get them there and we give them a price.

We’ve made a few mistakes along the way but it’s all in the name of experimentation and discovery and it’s through these learnings we were able to establish how we work and what we need to do to make our clients happy and produce the best work possible. Hopefully, this will serve as a lesson to agencies first starting out and get them pricing themselves efficiently from the start.

Check out our portfolio and follow our journey so far!