The Myth of the Hourly Rate

By Deane Barker • Posted on August 22, 2012

Blend has an hourly rate. It’s $175, for the record. We have an hourly rate pretty much because we have to have one. Everyone has to have one.

I have no idea if this rate is high or low. I think there was a survey years ago, but honestly, we don’t keep track of what other firms charge, and we’ve only ever changed our hourly rate twice in the history of the company.

That said, I’m going to argue for a minute that the hourly rate in professional services is less than important, especially so when it comes to web development work. And it’s of extremely limited value when comparing services.

Is a company charging $175/hour twice as expensive than a company charging $87.50/hour? Maybe, maybe not, but that distinction has little to do with the numbers.

Yes, $175/hour is twice as expensive if the product is simply one hour of work. But that’s not really the product, is it? The work product is what gets done in one hour of work. No, wait, that’s not it either. The true product you are buying is what value the results of that one hour of work provide you.

When evaluating or comparing an hourly rate, you need to consider three questions –

It’s effectively impossible to compare hourly rates unless you hold those three factors constant. Unless you can be sure both companies will provide same productivity, quality, and utility for your specific situation, comparing hourly rates is of extremely limited value.

This is item #78 in a sequence of 353 items.

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