A Penny for Your Thoughts, A Million for Your Results
Someone explain this to me:
If a client is best served by a problem being remediated quickly, or an innovation being implemented rapidly, or an improvement being installed momentarily, then why isn’t the consultant charging for the velocity of the work rather than for the duration?
In other words, hourly billing is inherently unethical. The client’s best interests are served by a quick resolution but the consultant’s best interests are served by a lengthy encampment. That isn’t what I’d call a “partnership.”
If a therapist can make me mentally healthy in one hour, isn’t that a lot better than waiting for a year, during which time I might commit mayhem? Shouldn’t the therapist charge me for that value, instead of insisting I visit for a year until the meter is full? My chiropractor urged a $250 program of ten visits, when, in reality, the first two visits wondrously took care of everything and I gladly would have paid $1,000 just for them! (Unlike most authors, I advise professional service providers not to read my books!)
When I moved to Rhode Island I interviewed a bookkeeper who couldn’t use a computer and charged by the hour. The bizarre dynamic of me paying more for her ineptitude completely escaped her.
The wedding planner for our daughter’s wedding (you can see photos at the bottom of my home page: www.summitconsulting.com) for which no expense was spared, gave me the option of $150 an hour or a flat fee of $3,500 with $1500 up front with eight months to go until the ceremony! I couldn’t write out the $1500 check fast enough, and she didn’t want the final installment until the event!
Would ten percent of a six figure wedding really be unreasonable to ensure the quality of the evening and the sanity of the parents? Cheap at twice the price.
Our time isn’t valuable. Our results are valuable. Input is irrelevant. Output is relevant. Tasks can be done for a price. Outcomes are priceless.
I don’t want film or digital images; I want memories. I don’t want a great room: I want a romantic experience. I don’t want a 16-position airplane seat; I want to arrive refreshed and ready to do business in London. I don’t want steel-belted radials and high torque; I want people to stare and point as I glide by.
And when they stare and point, they remark, “There’s that guy who only charges based on value.”
© Alan Weiss 2008. All rights reserved.
Niels Teunis
Alan,
I couldn’t agree with you more. I work for non-profits most of the time. Having read your work, and agreeing whole heartedly with your ideas about value, I try to apply this to my consulting. However, the culture of the sector is such that they cannot conceive of working in any other way than billing by the hour (and then complain about the hourly rate of course). I thought that the reason was that the non-profit constitutes a sector where fear of being ripped off, and fear for limited resources result in a fear of being ripped off. I have recently learned however, that the real problem is that they are not sufficiently outcome oriented themselves.
And then, there is my real problem. That should be my job, to teach them about the outcomes they need.
Your last paragraph about outcomes is the best. I realized I need to do a much better job speaking in terms of needed and desired outcomes.
Thank you
Niels
Shama Hyder
Your best post yet on Value Pricing.
How can we get more people on board with this pricing model?