If you’re pricing hourly, you’re potentially leaving a lot of money on the table in your freelance fashion design biz.
In this episode, business coach Jonathan Stark talks about value-based pricing. He shares his journey from charging by the hour to adopting a pricing strategy focusing on what clients truly value. From aligning services with client revenue goals, to three-tier value pricing strategies, to becoming meaningfully different, get ready to uncover some key insights that could totally change the way you think about pricing and your relationships with clients.
If you’re ready to shift your perspective on pricing and client engagement from transactional to transformational, get inspired by real-life examples, practical tips, and the psychological underpinnings that make value-based pricing a winning strategy, click play now and significantly increase your profits.
Resources:
Value Pricing Bootcamp, a free six-day email course to teach you how to make more money without working more hours.
Book: Value Based Fees by Alan Weiss
Episode Highlights
Why Hourly Billing Is Broken (and What to Do Instead)
- Business coach and former developer Jonathan Stark joins Heidi to dismantle hourly pricing and break down how value-based pricing can lead to higher profits, better clients, and more meaningful work.
The Problem with the Hourly Model
- Jonathan shares how hourly billing rewarded inefficiency in his software firm—and how it clashed with the desire to do high-quality, strategic work.
Going Solo to Change the System
- In 2006, Jonathan left his role to experiment with value-based pricing on his own terms—and saw instant results in income and client satisfaction.
Value-Based Pricing Explained
- Rather than selling time, Jonathan encourages creatives to align pricing with the value they deliver. The result? Less burnout, better fit with clients, and fees that reflect outcomes—not hours.
The Max Price Formula
- Jonathan breaks down his formula:
Max Price = (Client Desire × Budget) ÷ Available Options
This simple equation helps freelancers price based on impact—not effort.
Discovery Calls That Diagnose
- A strong value-based pricing strategy starts with diagnostic conversations. Jonathan and Heidi talk about how to ask smart questions, uncover real goals, and position yourself as a strategic partner.
Flexible Scope = Smarter Work
- Instead of rigid timelines, Jonathan recommends scoping projects with room to pivot—and linking deliverables to the client’s revenue-generating goals.
Better Pricing Proposals
- Use tiered “good, better, best” pricing to give clients options that align with their expected ROI. A $100K revenue goal? Frame your prices in that context.
Think Like a Partner, Not a Vendor
- Stark urges freelancers to get curious about client business models, sales plans, and goals—and position their work as a revenue driver, not just a service.
Final Takeaways
- Want to ditch hourly pricing? Start by changing how you sell. Focus on what clients want to achieve—not how long it’ll take you.
Key Questions and Responses
1. How do businesses align their services with clients’ revenue goals?
- Stark explains that businesses need to understand the downstream financial impact of their projects to grasp its potential value to a client. He emphasizes calculating prices based on the project’s worth to the client, advocating for proposals with different pricing options (good, better, best).
2. What are the steps to determine a client’s expected financial gain from a project?
- Stark recommends a consultative approach, encouraging professionals to ask diagnostic questions to understand the client’s goals and business case. This involves performing a potential profit analysis and brainstorming ways to enhance profitability through strategic suggestions.
3. How can freelancers overcome the fear of transitioning from hourly to fixed-rate pricing?
- Stark suggests using the “max price formula,” which considers the client’s desire, money, and available options. He advises that understanding these factors can help freelancers overcome fears about how clients perceive fixed pricing.
4. What is the role of the sales call in implementing value-based pricing?
- Stark highlights the importance of the sales call, likening it to performance skills in music or sports. He stresses focusing on understanding client needs and outcomes rather than the project scope during initial discussions.
5. How can freelancers provide higher pricing without relying on the client’s self-diagnosis?
- Stark explains that freelancers should ask smart questions to draw out necessary information, aiming to understand the client’s ultimate objectives. He advises against providing a specified service like a tech pack unless convinced it’s the right solution and suggests offering different pricing tiers based on perceived client value.
6. How should freelancers handle the discomfort with sales strategy being outside their expertise?
- Stark acknowledges this discomfort but argues that even technical freelancers are business owners who should understand business profitability. He stresses the importance of asking smart questions and positioning oneself as a consultative partner rather than just a service provider.
7. What final advice does Stark offer for approaching client requests?
- Stark advises understanding client motivations and projects thoroughly before proposing solutions. He encourages focusing on long-term value and partnership, rather than just fulfilling the initial request, and recommends clarifying what success looks like for the client to propose appropriate solutions.
About Jonathan:
Jonathan Stark is a former software developer who is on a mission to rid the world of hourly billing. He is the author of Hourly Billing Is Nuts, the host of Ditching Hourly, and writes a daily newsletter on pricing for independent professionals.
Connect with Jonathan:
Visit his website
Email him at: jstark@jonathanstark.com
Connect on LinkedIn