Pricing a small agency without losing your mind
How we moved from hourly billing to fixed-scope pricing, what broke along the way, and what we'd do differently.
We spent four years billing by the hour. Then two years doing fixed-scope. We’re not going back.
Why we switched
Hourly billing quietly rewards the wrong behavior. The slowest person on the team makes the most money. Efficiency is a penalty. We caught ourselves hedging — padding estimates, adding “buffer” — and realized our clients were paying for our uncertainty.
What fixed-scope forced us to do
- Write clearer proposals. A fixed price demands an explicit scope.
- Cut the engagement when it’s done. No more “we still have hours left.”
- Estimate like we mean it. If you’re wrong, it’s your margin, not your client’s.
What broke at first
The first two projects we priced fixed, we underestimated by about 30%. The third one, we overestimated to compensate and lost the deal. The fourth one, we landed. Now we have a spreadsheet of the last 40 projects with actual hours, and our estimates are within 10% on median.
Our current model
- Discovery — fixed fee, two weeks.
- Project — fixed fee, milestone-based payments.
- Post-launch retainer — optional, fixed monthly.
Nobody’s ever asked us for a timesheet since we switched. Nobody on the team misses filling one out.
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- #pricing
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