If you charge $120 per hour and a client wants 20 hours a month, how much are you making and how much are they spending?
At $120 an hour for 20 hours you’d make $2,400 a month, which is also what the client spends. The downside for you is that income isn’t guaranteed – one month they might need 15 hours, the next 25, so your revenue varies. For the client the downside is that they pay the full hourly cost with no guarantee of a fixed budget, and the project can run over schedule or budget.
The client bears the full cost – $120 an hour adds up quickly, and there’s no guarantee on total spend. A project could take 30 hours or 50 hours, meaning the client could go way over schedule or budget, and they have no certainty of when they’ll be billed or how much the final bill will be.
If you work a few hours and then something happens in your life and you leave, the client has no guarantee you’ll be around. They’re paying per hour, which doesn’t obligate you to stay on the project, so there’s no lock‑in or continuity for them.
Price the system using value‑based pricing: calculate the client’s saved labor (3 hrs/client × $30/hr ≈ $100/mo) plus the opportunity cost of them signing an extra client ($5k/mo). That yields a total value of ~$5,400/mo; you can charge about a third, roughly $1,800‑$2,000/mo.
Honestly, there’s a lot of math you can do, but often you just go with your gut. For instance you might decide to charge $2,500 instead of $2,300 and see what happens. Also, avoid round numbers – don’t charge exactly $3,000; use something like $2,945 to make it feel thought‑out. When delivering pricing, estimate the value you provide and take a percentage of that: up to about 30% of revenue or up to 50% of profit. For example, if your system generates $10,000 a month for a client, you could charge up to $3,000 a month to manage it, or a one‑time $3,000 if it generates $10,000 once. If it saves the client money, you could charge up to 50% of the savings. These are rough guidelines, not strict rules.