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There are 2 ways to get off the hourly treadmill:

  1. Billing based on “value created”
  2. Productisation of services

Billing based on value created (which Patrick McKenzie talks about a LOT) is almost impossible when working with small businesses. In order to demonstrate likely return on investment for your work, you need to have a baseline of data (lots of data) and be able to show that, given some improvement on some metric, your services will be worth $X, then you just have to convince them that, based on your track record, this is an improvement you will be likely to generate. Bingo, your hourly rate is now $5,000. But small businesses don’t have that data, you don’t have a track record, and you can’t get big businesses as clients. Boo hoo, back to the drawing board.

The other way is to go for “productisation”. What this means is that you start with a very low risk and predictable service that you can do over and over again while you optimise it. For example I run http://www.decalmarketing.com/ where we do adwords management for ecommerce stores. We sell a standard “first month of adwords” program that provides some insight into the business and gives us an idea of how to proceed strategically. Even though when I first started out, I did all the work, now that I’ve done it a number of times, I outsource all the work (including writing proposals, following up on deals, closing deals, invoicing, setting up the client and fulfilling the service). Therefore, every time I make a sale, I make at least $300 (we sell the service for $600 and it costs less than $300 to deliver). Sometimes it costs much less than $300, very rarely it’ll cost me more than that, because I can hire stay at home mums for $20/hour to do the work for me.

That is a productised service where my earnings are limited only by my ability to sell the service, not my ability to deliver the work (there are an abundance of people who can do the work for me and my hiring/training processes are all systemised so I don’t even have to do that bit).

Once we get past that initial product, there are more complex offerings/upsells that I can propose to the client, some of which are more systemised than others, but as I go along I can take this process further up the chain: continually systemising each service I deliver at higher and higher margins.

But start with something simple: find something people need done, do it, write down how to do it, train others, reap the rewards.