Model one: hourly
Hourly works when the work is variable, the scope is hard to define and the customer wants to feel in control of how much they spend. Plumbing call-outs, accountancy advice, legal consultations, hands-on technical support.
Hourly punishes you for getting good. The faster you finish, the less you earn. It also turns every conversation into a discussion about the clock. Most service businesses outgrow hourly within their first three years, even if they keep it as a fallback for unusual work.
Model two: project
Project pricing - one number for the whole job, agreed before you start - works when the scope can be defined upfront. Building a website, designing a logo, fitting a kitchen, writing a sales page, setting up an online shop.
Project pricing rewards efficiency. The customer knows the total in advance. You're free to do the work however you want. The risk is scope creep - the job grows beyond what was agreed without the price moving. The fix is a written brief with a clear list of what's in and a process for handling change requests.
Model three: package
Packages are pre-defined bundles at fixed prices. A clinic's six-session course. A coach's three-month programme. A photographer's wedding bundle. A maintenance contract that includes four annual visits.
Packages are the easiest model to sell because the customer can compare options without doing maths. Three packages priced at, say, four hundred, six hundred and a thousand pounds gives a clear ladder. Most customers pick the middle one, which is usually the most profitable. We'll come back to this shape in 'Packaging Products and Services' in the next chapter of this category.
- When the same kind of customer keeps asking for the same kind of help.
- When you can describe each package in one sentence.
- When the work involved in each package is roughly predictable.
- When customers can self-select - they read the page and know which one they want.
Model four: subscription
Subscriptions are a regular payment for ongoing access or service. A monthly software fee. A weekly meal delivery. A quarterly maintenance check. A monthly retainer for a small slice of your time.
Subscriptions are excellent for cash flow and customer retention. They're harder to start than they look - the first hundred customers usually take two years - and they require ongoing service to justify the recurring charge. Worth considering for any business where customers have a recurring need they currently solve in fits and starts.
Model five: retainer
Retainers are subscriptions with more service involved. A monthly fee for a defined amount of access, work or attention. Common for accountants, consultants, agencies, lawyers and marketing freelancers.
Retainers smooth out the income roller coaster of project work. They also reward the customers who keep using you with priority and predictability. The trap is letting retainer scope drift - within six months a customer can be using twice the time they pay for. A simple monthly statement showing what was used keeps the relationship healthy.
Picking the right model
Most small businesses end up with a mix. A core model for the bulk of the work and one or two satellite models for special situations. A copywriter might do projects for new sales pages and retainers for ongoing blog work. A plumber might do packages for landlords and hourly call-outs for emergencies. A trainer might sell courses and offer individual coaching.
Three questions to help you pick. How predictable is the work? More predictable means packages or subscriptions. Less predictable means hourly or project. How much does the customer want to feel in control? More control means hourly or project. Less means packages or subscriptions. How much do you want recurring revenue? More means subscription or retainer. Less means project or hourly.
When to switch
Most owners switch from hourly to project, then from project to package or retainer, over a few years. Each switch is uncomfortable and produces some short-term churn. Each one also lifts margins, simplifies sales conversations and reduces stress.
Don't switch every customer at once. Try the new model with the next two or three customers. If it works, move existing customers across at the next natural moment - a renewal, a new project, the start of a year. Within twelve months the new model becomes the default.
What to do this week
Pick one offer that's currently priced hourly or per project. Sketch out what it would look like as a package - three options at three price points. Don't change anything yet. Just see how it feels on paper.
Build trust before asking for action. The model you choose is part of how you build trust. The next chapter is about the actual number on the page and how to set and explain it.
