I find this advice unhelpful. In the past, when I was making $23/hour as a web developer, people would occasionally ask to hire me for freelance work. I've given various answers, from $30 to $100, and haven't had any takers yet. The only freelance work I've actually done so far was when I said, "what do you think it's worth?" and my friend said, "I dunno, 60?" It was for about an hour of work so I said yeah, but I had already done the work by that point anyway.
$100/hour seems like the right amount to me, since my company was billing me out at $116. But no one else thinks so. I'm pretty sure there's more to it than just "charge more".
I think this piece of advice is extremely relevant for those selling B2B software/products which comes in bigger 'chunks' than your labor which can be sold by the hour.
The gist is that while you (as the average B2B startup) can estimate how valuable your product is to your average customer, you will most likely vastly underestimate the cost of replacement for such a system. In other words, if your sales pitch goes well and they like the product but think to themselves "How much would it cost us to build this ourselves?" you will underestimate this cost from the outside. This is because the cost of replacement is a reasonably good proxy for a price ceiling and by being aware of it you can get a much higher average selling price.
Then you are not competitive enough or not marketing to the right people.
You might think that there is a market for $15/h skilled developers, but there probably isn't. There is a huge market, however, for NewStartup CEOs looking for dev at $15/h.
They'll keep running in circles until they find something on their budget, or they don't. But they'll not raise prices. Beware of those.
your company markets, has sales people, and manages every part of the transaction from signing the contract to developing the code. I don't know if all that is 77/hour, but it might be.
I find this advice unhelpful. In the past, when I was making $23/hour as a web developer, people would occasionally ask to hire me for freelance work. I've given various answers, from $30 to $100, and haven't had any takers yet. The only freelance work I've actually done so far was when I said, "what do you think it's worth?" and my friend said, "I dunno, 60?" It was for about an hour of work so I said yeah, but I had already done the work by that point anyway.
$100/hour seems like the right amount to me, since my company was billing me out at $116. But no one else thinks so. I'm pretty sure there's more to it than just "charge more".