“I hate being ‘that guy’”
The CEO complained to me that every single week he had to nag his professionals to complete their time sheets. They’re due one day after the week ends.
“I threaten that their checks will be delayed.
I offer rewards for anyone who submits early.
Nothing seems to work.”
I asked “Have you talked to any of the worst offenders? Do you know why they resist?”
CEO: “No, I haven’t. What do you think I’ll learn?”
Me: “I’m guessing that you’ll hear the same things I’ve heard many times.”
“Documenting how I spend every hour of every day is tedious, painful, and boring.”
“What if I take an hour or more off? It feels that every single entry will affect my year end performance review and my bonus.”
“I hate the competition for high biller of the week, month, year. I didn’t get into this work just to compete for something dumb like hours worked.”
“What does time have to do with how we help our clients, anyway?”
After a pause the CEO said…
“I wish there was something I could do to change all that hate. It eats at me inside.”
“There is,” I said. “But you’re not going to like it.”
“Drop time sheets completely.
Then you’ll never have to nag anyone again.
Not only that, but your relationships with your professionals will improve.
You’ll be able to talk with them about how to deliver more value to clients.
Won’t that be good for your company?”
I wish I could report that he had an immediate change of heart and began preparing to adopt IMPACT Based Pricing as soon as possible.
That kind of instant magic only happens in movies.
However, we did start exploring what IMPACT based Pricing means.
I conducted an on-site pricing makeover workshop with three senior professionals.
Here’s the process you can copy.
Part One: The firm’s value proposition.
- Write down your current value proposition.
- Rewrite it from the buyer’s point of view. What IMPACTS do they want you to deliver?
Part Two: Document IMPACTs you’ve delivered recently.
- Make a simple chart with client/project name, IMPACT you delivered, and the significance of that IMPACT (1-10)
Part Three: Analyze the fees for these projects.
- At the end of each line write down the fee you charged based on hourly billing.
- Compare the fees to the significance rating. Where are significance and fee high? Where is significance high but fee is low?
You now have insight into your work. The differences you deliver to clients, the significance of those differences, and whether the fee correlates to the significance.
It’s the first step.
Next steps include:
- What profit do you require for the year? There is one right number for your firm. Set it and stick to it.
- What revenue will get you that profit? The simplest equation is Expenses + Profit=Revenue
- If you have approximately the same number of client projects in the next 12 months, what would be the average fee for each one?
- Given that you’ll deliver a variety of IMPACTs with different levels of significance, how would you adjust that average up or down?
- Who are your best clients? How can you meet with and talk with them about IMPACT Based Pricing?
- What else do you need to know and understand?
- When will you start IMPACT Based Pricing?
This process will get you prepared for IMPACT Based Pricing.
An accountant, an organizational development expert, and a digital design firm all copied this process in the past month.
Here’s what the digital design specialist had to say:
“I was intrigued by the idea that we could stop hourly billing and make more money so I decided to copy Susan’s process. Once we started talking about the impacts or differences we make for our clients, we couldn’t stop! We are amazing, and our clients love us. And billing by the hour simply never correlates with our quality and their enthusiasm. We had meetings with five clients and all of them said ‘yes’ to the idea that fees for future work would correlate to the IMPACT we deliver. The next year will be our best year ever.”
Relationships with in-house staff and company clients are the keys to profit.
IMPACT Based Pricing helps both.
Copy my process for IMPACT Based Pricing and create a solid foundation for your next level.