Pricing You Can Love
Like sands through an hourglass, continually building at the bottom and reducing at the top; so hourly billing and poor pricing policies are only building low-level clients and reducing the effectiveness to capture and retain high quality, premium business.
The unrequited love affair of professional service firms and hourly billing perpetuates despite the plethora of information, feedback, intelligence and common sense articulating why it must not be.
But still the “Professions Malaise” survives, while those in the professions scratch their heads inextricably confused as to how they might effectively improve and grow their businesses while improving the value and results for their clients.
The marketing collateral of professional service firms proclaim the ethics and values they hold dear as if unique and unchartered, ready to sweep a wave of new clients to their shores: “We hold uppermost the values of providing value-for-money quality advice while ensuring our honesty, integrity, and the highest ethics in business delivery.”
Well, there’s a shock, I was seeking an unethical professional who would treat me poorly and charge me exorbitantly. As Nordstrom wrote: “The surplus society has a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality.”
Pricing by the hour or day is unethical, inefficient and guarantees no true value for the client. It also immediately places a cap on the amount of revenues that can be generated. It also positions the professional in the unenviable position of being treated as a commodity. And, the commodity-comparison is not how a professional should wish to be evaluated by prospective clients.
Competing on price is a nebbish approach in attempting to gain market share and build a mercurial professional services firm. Because no matter how cheap you are, if it goes wrong, the client is not cutting you any slack. You need to be paid in a way that the client appreciates, respects and values the service, advice, and work you have provided, such that they will use you again. And, you were paid well and enjoyed the work that you wish for more clients of the same.
When being charged by the hour, the client is always wondering how long this is going to take. “Well, can you do it in less time?” “Can you add this component while you’re there?” “Can’t you do it for less money?” Before you know it, they are getting quotes from every competitor in town.
The reason being: professional service firms are VERY clear about what their costs will be, with many placing their hourly rates front and centre of their marketing collateral. But they’re not so clear about the value, results and return on investment that the client will receive. It is easy for a professional service firm to stand out from the crowd … bring clarity to achieving the desired outcomes and producing valuable results for the client while offering a project fee to allay the suffering of the client wondering how much this will cost.
Cupid may have shot an arrow through the heart of time, making all professional service firms fall in love with hourly billing, but the marketplace is telling you that if you want to be their valentine, charge appropriately for the value you deliver no matter how long … or short your time involved may be.
Learn more about intelligent pricing practices by reading my book: Marketing Wisdom. Available in all good bookstores such as: Amazon, QBD Bookstores, Dymocks Bookstores, Angus & Robertson Bookstores, Barnes & Noble Bookstores, or direct from Wiley Publishing or here in our online store.