For service-based businesses, especially in design and architecture, hourly billing can be a major obstacle to growth. It creates uncertainty, limits earning potential, and forces professionals to constantly justify their time.
Productization offers a better way: structured services with fixed or value-based pricing. By moving away from hourly billing, firms can create a more profitable and scalable business model while making purchasing easier for clients.
Why Hourly Billing Holds You Back
While charging by the hour seems straightforward, it has several downsides:
- Clients hesitate to commit because they don’t know the final cost.
- Time isn’t the real value – the expertise and results are.
- Limits income potential – earning is tied directly to hours worked.
- Encourages inefficiency – faster work means less revenue.
- Creates pricing friction – clients may question every billable hour.
Switching to fixed or value-based pricing removes these obstacles and allows you to charge based on the results you deliver, not just the time you spend. However, when you’re getting started, it might make sense to offer your services at an hourly rate, so you can learn how long time delivering your services takes.
But then again, it’s far easier to sell productized services, and you can always adjust your prices based on the outcome. Just remember to track your hours and other costs!
Choosing the Right Pricing Model
There are several ways to price your services, regardless of whether they are bespoke, based on an hourly rate, or productized. Here are some of the many pricing approaches that work well for productized services:
Simple Flat-Fee Pricing
- Ideal for well-defined service packages.
- Example: A structured “Interior Design Consultation” for $500.
- Benefits: Transparent, easy for clients to buy, and scalable.
Tiered Flat Free Pricing
- Offers multiple levels of service at different price points.
- Example: Basic floor plan review ($750), full concept package ($2,500), VIP design experience ($5,000+).
- Benefits: Appeals to a wider range of clients and maximizes revenue potential.
One thing to keep in mind when doing tiered pricing: you must differentiate the packages from each other and clearly show what’s included in each package. Also, from the buyer psychology point of view, you can price the packages relatively to highlight the one you mostly want to sell. This is called price anchoring.
Subscription or Retainer Model
- Clients pay a monthly fee for ongoing access to your expertise.
- Example: A design firm offering continuous consulting for $2,000/month.
- Benefits: Provides predictable revenue and deepens client relationships.
Read also: How to Price Interior Design Services
How to Set the Right Price for Your Productized Services
As discussed earlier, it’s hard to set a price if you haven’t had any previous projects. In fact, it’s hard regardless of your expertise – and sometimes, you just need to set a price and get started with it, and then adjust while you go! Follow these steps to price your offerings confidently:
Define Your Costs and Profit Margin
First things first: What’s your cost structure? In this calculation, you need to take into consideration every cost related to the project itself and running your business.
- Calculate materials, software, team salaries, and overhead.
- Calculate the cost of keeping your doors open: rent, telephones, insurance, etc. Yes, your client work needs to pay for those, too!
- Ensure that pricing provides a healthy profit margin.
A service business in design typically operates at a 15-25% Net Profit Margin, while high-performing firms have higher NPMs. When you productize your offers AND keep a tight eye on your costs, you can achieve a higher NPM.
Research Market Rates
What do your colleagues do?
- Compare similar offerings in your industry.
- Position your pricing competitively while emphasizing unique value.
Highly important to acknowledge that you cannot compare a designer in NYC and a designer in central Spain (just two random examples). Their rates will always be different. Their project will always be different, and their overhead will always be different. That’s why you cannot take one designer’s cookie-cutter pricing solution and apply it to yours – and call it a day!
Price Based on Value, Not Just Effort
You did go to school to study design, right? Or, you have been working in large firms before you ventured on your own? Or, you have studied law, marketing, business, engineering, art… and you excel at that, no? You bring value to your clients, and you need to see it like that, even if you’re just getting started! Always, ALWAYS, price your services and products based on the outcome for your clients. And then add taxes. 🙂
- Focus on outcomes (better spaces, increased property value, brand impact).
- Understand the real value you bring to the table.
The value, by the way, is not always the final design… It’s the time that your clients save by not managing everything by themselves! They likely have jobs, too, right? Well, what’s the cost of staying away from their jobs to manage something that they have no experience in? Yes, you’re right, tastemaker.
Test and Adjust
Of course, your pricing will change. It must do that, not only because of inflation, but also because you get better at your job, and you learn from your experiences.
- Start with an initial price and adjust based on client response and demand.
- Higher prices often attract higher-quality clients who value expertise.
A closing note on testing your pricing structure: it’s always easier to increase your price than lower it. That’s why you need to set your desired price and then start lower to test the market. Then you increase the price incrementally until you’re at the level that makes sense to you.
Handling Client Pushback on Pricing
Some clients may resist structured pricing, especially if they’re used to negotiating custom quotes. Overcome objections by:
- Emphasizing clarity and simplicity – “You’ll know exactly what you’re getting and at what price. No surprises.”
- Framing pricing in terms of value – “This service will save you X hours or increase your property value by X%.”
- Offering tiered options – “If this package doesn’t fit, here’s another that might work better.”
Moving away from hourly billing is a crucial step in productizing your services. By adopting fixed, tiered, and value-based pricing, you can create more predictable revenue, attract better clients, and focus on delivering results. The key is to price confidently, communicate value effectively, and refine your pricing strategy over time!
