Deciding Between Hourly and Non-Hourly Outsourcing Arrangements

May 13, 2020

Deb Cinkus, Founder & CEO of Polished Geek recently visited the Outsourcing Oasis podcast. She shares with our panel what it's been like living in Central America while her business continues to operate in the US - walking us through the decision to move from North Carolina to Guatemala. 

The panel discusses the challenges of dealing with staff rotation on the client's side, hourly vs non-hourly, and briefly touches on value-based pricing.

Let's jump into some of the highlights. 

Hourly vs Non-Hourly & Working On A Retainer

There is a heated debate going on between what’s better hourly or non-hourly rates. The panel discusses this topic in-depth examining it from both an agency and client perspective. Deb and David are both in favor of working on retainer, while Charles mentions he was a big proponent of hourly up until recently when he invited Jonathan Stark on The Freelancers Show to talk about value-based pricing. 

As an agency owner recurring revenue is the lifeblood of your organization. Having that core monthly revenue allows you to plan, grow, and invest in your team.   

As a client, you might be tempted to pay hourly based on the idea that you’re only paying for what you use but when you take into account how much time you'll spend going back and forth on how many hours each task will take. You could realistically end up negating the cost-benefit of paying hourly in the first place. 

Working on a retainer can provide value for both agencies and clients. Counting hours will inevitably slow down the decision making process. With a retainer, clients won’t need to factor in how many hours each task will take before making decisions. 

Also many times, conflicts may arise when using hourly rates.

Clients don’t always have an in-depth understanding of the activities or processes they’re asking agencies to perform, which can lead them to question if the time it takes the agency to perform tasks aligns with industry standards. Not a lot of resources exist to help answer those questions.  So without prior first-hand experience, you’re limited to some guesswork and whatever insight your network can provide. Which obviously isn’t ideal for either party and generally leaves both feeling dissatisfied.   

Be Proactive - Especially When Working On  A Retainer. 

Clients get busy and when you haven’t heard from them in a while it’s tempting to say “Money is coming in and they didn’t ask for anything, awesome!” but that’s not gonna help the client be successful and it’s not going to help you keep that client in the long run.

As a service provider, it’s on you to reach out to a client when they’re not utilizing you as much. 

Becoming A Digital Nomad 

One day, Deb and her core team came to the realization that they could literally work from anywhere in the world as long as they had internet. So why was the most interesting place they’re working from a local Starbucks?

They looked at a number of options even considering renting a tour bus for a while! Eventually settling on living abroad and becoming digital nomads in the literal sense. They considered numerous locations eventually settling in Guatemala. 

Reasons for choosing Guatemala: 

  • The timezone lines up  
  • It’s easy to travel back to the states 
  • Cost of living was a consideration
  • Most importantly they actually knew someone on the ground

The first year was filled with adventures. They had 6 people and 4 cats living in 1 house. At first, they were all really happy living together abroad but after about a year some people grew tired of the situation and wanted to move back to the states. The ones who stayed decided it would be best they all move out on their own, bringing an end to Deb’s reality-show-like experience.  

For more of Deb’s insights on outsourcing – check out the full episode on the Outsourcing Oasis Podcast or listen below.




Deb Cinkus:

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