When you go to a store to buy something do you ever consider how many hours it took to make it?
When you are comparing an Apple iPad with a Samsung Galaxy Pad do you think about the production process or are you more concerned about the features and the relevance to you and the cost and its affordability to you?
Are you at all concerned about the number of hours taken to manufacture it or the hourly rate paid to the workers who developed it? …. Of Course Not!… You either want it because it suits you need and budget or you Don’t.
In other words is it about the value it brings NOT the time taken to make it or cost of overall manufacture when you make a purchase.
So why is it when it comes to services its all about the time taken?? …irrespective of value or even efficiency – the way the time is spent.
Do you really want a lawyer who spends an aweful lot of billable hours working out you should plead guilty or one who commits to a dollar figure to get the best result for you? Likewise should an accountant be rewarded for saving you on your tax bill or paid for the time spent wading through your receipts?
And of course why pay a marketing consultant by the hour when they don’t get you the only results you want from them e.g. increased sales and profitability??
So why do we charge customers by the hour — is it because its easier or is it because we cant think of a better measure …..or simply that we don’t know what we are worth to them and or what they are prepared to pay so we milk it for what its worth for as long as we can??
At best the Timesheet is a record of attendance but its not even a good measure of Presenteeism – The Opposite of Absenteeism – Turning Up but Not Turning on.
Right now we are midst answering a tender and the hardest part is working out how to charge them because we don’t know their budget ….and moreso we don’t know the value they place upon the outcomes of our work ….For Example is a FaceBook like worth anything at all. Some would say it worth plenty but is that what the client believes or are they just going along with a supposed Social Media Expert told them??
So right now we are trying to add up the hours we will spend and multiply it by a $$ number they will accept …. Clearly not good enough is it??
Sure its tough to work out the value you bring to a customer but surely its worth doing and surely its what they want to pay for….results… value….. impact …. not for perhaps a new consultant to learn at their expense … Yes that does happen as we all know!!!
Recently I heard Ron Baker speak on this topic and it made a lot of sense
Ron Baker’s Mission: “To, once and for all, bury the billable hour and timesheet in the professions”
Ronald J. Baker started his CPA career in 1984 with KPMG’s Private Business Advisory Services in San Francisco. Today, he is the founder of VeraSage Institute—the leading think tank dedicated to educating professionals internationally—and a radio talk-show host on the www.VoiceAmerica.com show: The Soul of Enterprise: Business in the Knowledge Economy.
He is the author of six best-selling books, including: Professional’s Guide to Value Pricing; The Firm of the Future: A Guide for Accountants, Lawyers, and Other Professional Services, co-authored with Paul Dunn; Pricing on Purpose: Creating and Capturing Value; Measure What Matters to Customers: Using Key Predictive Indicators; and Mind Over Matter: Why Intellectual Capital is the Chief Source of Wealth; and his latest book, Implementing Value Pricing: A Radical Business Model for Professional Firms.
As ever I don’t have the answers ….but I think Ron does so read his latest book and look at how you can assess value and banish the timesheet in your business in the quest for a more effective approach to your business and a better method for establishing the value you bring to your clients.
Perhaps we need a new role – Chief Value Officer
Like all things when it comes to change, innovation, disruption in business you need to do the Hard Work rather than Work Hard. And it will be hard work changing the value paradigm away from the time sheet driven approach but well worth it for you and your customers .
When it comes to Hard Work as opposed to Working Hard one of my favorite authors summed it up in a book I read whilst laid up in hospital a while back – Whatcha Gonna Do with That Duck?
“Hard work is about risk. It begins when you deal with the things that you’d rather not deal with: fear of failure, fear of standing out, fear of rejection. Hard work is about training yourself to leap over this barrier, tunnel under that barrier, drive through the other barrier. And after you’ve done that, to do it again the next day” – Seth Godin