Is Value-Based Pricing Pirate Capitalism?

What is your work worth?

In traditional wage-labor relationships (aka “normal jobs”), your work is worth whatever your boss says it is worth. In most instances, you’re compensated for your time, which means efficiency and growth are disincentivized. If you’re hourly, you make more if you work slower. If you’re salaried, the more efficient you are, the more work is assigned.

In a supposedly “capitalist” economy, we have no control over worth or the relationship between time and money when working for others.

What is the promise of capitalism? (Stay with me here…I promise we’ll get to the pricing part.)

According to ChatGPT, “Capitalism is an economic and social system characterized by private ownership of the means of production, where individuals and businesses operate for profit in competitive markets.”

In hierarchical work structures, there is no “profit” for the employee, and we don’t own the means of production. We’re held hostage by myths around security and stability, giving away all of our rights to our skills, ideas, and products. The promise of capitalism is reserved for those at the top.

When you work for yourself, you get to strike a different bargain.

As solopreneurs, we get to change the relationship between time and money and own our expertise in a world that wants to take it from us.

The catch is that we live in a society where working in a hierarchical system is the norm; we’ve been trained all our lives to believe that selling our time for money is the “way things work.”

This conditioning means that it is incredibly hard to shift our mindset to worth based on value because that’s not how the world operates.

Value-based pricing is, therefore, a transgressive act. It is a mechanism to go rogue, to circumvent the system so that we get what we need from our work…it’s pirate capitalism where instead of trying to fix the system, we step outside and create our own.   

This means it is not a strategy that someone can teach you in a series of steps and is more complex than hourly vs. flat rate. It is a paradigm shift that completely changes how you think about your work and worth. 

Value Comes with Expertise

Any individual's value to a client is directly correlated to their expertise. Expertise is not simply about the content of what you do or your skillset; it is a two-sided equation. On the one hand, it is an ongoing evaluation of who you are best positioned to serve, what problems you solve for them, and what you do to solve them. On the other hand, it is an ongoing evaluation of who we are, what we need from our work, and what we want in our lives.

This kind of distilled, coherent expertise takes time and experience to develop. No checklist, method, or course can help you find it (although some of those can get you there faster); the only way to find your expertise is to do, try, fail…and pay attention.

In hierarchical work systems, we rely on others to tell us what to do and how to do it. When you work for yourself, you have to identify the “what” and “how” for yourself. Every conversation, proposal, project, and rejection is a lesson that helps us become clearer about our unique value.

You can charge whatever you want when you find your unique value because there is no competition. That may sound like crazy bro-marketing jargon, but the truth is that our unique value is intrinsic to us. We find it when we stop trying to be like everyone else.

In more practical terms, the more we use our experience as a testing ground, trust our instincts on the right types of clients and projects, and then adjust our business model accordingly, the more we differentiate ourselves in the market.

The more we differentiate ourselves in the market, the better we approach our clients with authority instead of desperation, guiding them toward understanding their problems and providing them with the right solution. Clients will pay a lot more for an expert who helps them understand their problems instead of saying yes to whatever they want.

Value Increases Over Time

Long-term client relationships are the easiest way to implement value-based pricing, but most of us structure them incorrectly.

When we start working with a new client, there is a learning curve regarding context, systems, and personalities. That means that the work will inherently take longer in the beginning. As the work progresses, it gets easier and takes less time. The natural instinct is to start pricing future work lower because it is a lighter lift when, in fact, we should be pricing it higher. 

The value for a client with an established freelancer who understands their context and can execute with zero hand-holding is immeasurable. The last thing that the client wants to do is find someone new. In addition, if you’re good at what you do, the quality of the work also goes up over time, even when the time it takes goes down.

If you’re charging for value, you should increase your rates over time for the same work, even as it gets easier and easier. 

On a practical level, there’s also a tipping point in long-term contracts where it makes sense to go from an hourly to a flat rate. It can sometimes make sense to price an initial phase hourly while you and the client get to know each other. The trick is to switch to a flat rate (using your average hours as the baseline) when you can tell that the work is about to get easier. Then, you’ve effectively increased your hourly rate for the same deliverables or tasks.

Is this a dishonest tactic where we’re trying to squeeze more money from our clients for less time? Nope. That’s the employee mindset brainwashing talking. We’re still delivering the same (if not more) value. If our clients pay us for value—expertise shared, deliverables delivered, and tasks accomplished—then time is irrelevant. 

On the flip side, time is not irrelevant to us if we’re spending way more time than we should. This is where an air-tight, iterative scope will help you and your clients understand where the boundaries are in terms of work completed.

Value Is Contagious

We cannot shift paradigms on our own. We are so paralyzed and brainwashed by top-down narratives that dictate the relationship between time and money that it is impossible to break free from them without the help of our peers.

For many clients, you will need to help them decouple time and money to understand the value of what you are providing and why it’s worth what it’s worth. Every time you do this hard work, you are not only setting yourself up for a better client engagement, you are paying it forward to every solopreneur who comes after you.

You’re also changing the client’s thinking around time, money, and value, hopefully freeing them from this brainwashing that keeps us all stuck in overwork and underpay.

More directly, challenge the thinking of your solopreneur colleagues when they come to you for pricing advice. Less time doesn’t mean less value.

Pirates make their own rules.

Solopreneurs can force capitalism to live up to its promise by not asking permission to define our own value and price it accordingly. When we do that, we step outside the hostage mentality that traditional employment systems force upon us – trading time for money, compliance for job “security,” and our unique skills for the reputation of those above us.

Let’s take work back together each time we demand what we’re worth.