The Efficiency Penalty
The better you get at your work, the less hourly billing pays you for it. The fix starts with your offer, not your rate.
Quick note: I’m trying a new format. Most weeks, I’ll send a short essay like this one, a single idea you can use in about a 3-minute read. The bigger framework deep dives you’re used to will still show up about once a month. Reply and tell me what you think. I read every response.
A consultant I talked to recently charged the same hourly rate for two very different hours of work.
One hour was a training session that improved how a 10-person sales team sold. The other was cleaning up a CRM from his couch.
It was the same rate and the same invoice line for years.
Nobody complained, either. Clients paid it, the math felt fair, and every project got scoped the same comfortable way. Hours in, invoice out.
But he called it his most expensive mistake.
It wasn’t a mistake because the rate was too low, either. It was because of what the model was quietly doing to him: the better he got, the less each job paid.
Hourly pricing doesn’t price your work’s value. It prices your time. And once those are the same thing, your own improvement starts working against you.
Think about what happens as you get better. The diagnosis that used to take you a month takes a week. The deliverable that used to take 20 hours now takes 6. You spent years earning that speed.
Hourly pricing pays you less for it. Same result, fewer hours, smaller invoice.
I call this the efficiency penalty: the tax you pay for mastering your craft while billing like you haven’t.
What makes it worse is that your client never wanted the hours. Nobody has ever hired a consultant hoping to buy 40 hours. They wanted the after state that the consultant can help them achieve: the team that sells differently, the pipeline that is filled, and the problem that’s gone. The hours were always just packaging.
So he repriced. Everything moved to phases and outcomes: a fixed price for the transformation, not a meter running while he worked.
His revenue went up. But that’s not the interesting part.
The interesting part is what it did to his head. He told me: “When I’ve got two deals going, one hourly, one project, I don’t even care how many hours I’m spending on the project. I just want to get the thing done.”
That’s the whole shift in one sentence. On the hourly deal, hours are the product. Part of his brain is always on the meter: logging time, justifying time, quietly aware that solving something fast means a smaller invoice.
On the project deal, the outcome is the product, and the price is already set. The meter is gone. All his attention snaps to one thing: get the client the result.
Same consultant, same skills, but opposite incentives.
Most solos already know this rule. Nobody prices hourly because they think it’s the best model.
But it sneaks in anyway. The flat monthly retainer on your fractional engagement that still carries an hours expectation underneath. The one-off request where quoting an hourly rate is easier than rescoping the project. I’ve done it. We all have.
Hourly hangs around because it’s the path of least resistance. This points to the real lesson in this consultant’s story: he didn’t just raise his rate or swap how he bills. He reshaped the offer itself into phases with defined outcomes, so a fixed price had something to attach to.
You can’t bolt outcome pricing onto an offer that’s still shaped like a bucket of hours. The offer and the pricing have to change together.
Want to know which side you’re on? Pull up your last invoice and ask what the client actually bought: your hours, or a result.
Then run one test. If you got twice as fast next month, would that invoice increase or decrease?
If the answer is decrease, you’re renting out time, not selling outcomes. And every hour you invest in getting better at your craft is buying your clients a discount.
You don’t need to reprice everything this week. Start by noticing which side of the line you’re on.
Then, when possible, charge for what changes, not for how long it takes.
Keep building,
Garrett
P.S. When you’re ready, here are two ways I can help you:
Join the 10x Solo community. A private community for full-time B2B solos, fractionals, and small agency owners. Weekly workshops, honest peer feedback, and referrals. Apply here.
Work with me 1:1. For maxed-out consultants, fractionals, and agency owners who want to make more money in less time by refining their business model, offers, and systems. A few spots open at a time. DM me to set up a time to chat.
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