What if charging for time communicates to clients and prospects that “We focus on our internal interests above all. When we focus on OUR interests we will prosper as a firm.”
How Does this Happen?
All time-based pricing models look at the hours in a week as the foundational resource. As with any resource, the more utilization, the higher the return on that resource.
This means that selling time is the firm’s goal. Each provider within the firm is pressured to sell as much time as possible.
- Have a question? Expect a bill.
- Something takes longer than anticipated? Expect a higher bill.
- Life threw you a curve ball? Expect an even bigger bill.
Relationship building, which is so critical to client lifetime value, is limited because the provider either charges for the time it takes, or the client rejects your outreach because they don’t want to pay.
Every client understands all of this. They often wonder if the time they’re paying for was deployed in their best interests or in the firm’s best interest.
It’s not that your firm is dishonest or inaccurate. The vast majority of providers do keep accurate time sheets and don’t casually add a bit of time here and there thinking the client will never know. A firm like that will be dishonest in other ways and will find itself out of business.
Time Based Pricing is a Barrier to Growth
- Time based pricing models may cause your firm to reject or delay technology advances. What’s the point of speeding up or automating, if those actions cut into the time you can charge for? After all, anything the firm does to speed up the work costs it money. There is no alternative conclusion.
- Time based pricing models reduce the desire to improve providers’ skill sets. First, acquiring new skills takes time out of the billable week. Second, there’s a ceiling on hourly rates and highly skilled people may not get the compensation those skills deserve.
- Time based pricing models put the firm at risk of price wars with competitors. There’s nothing to stop a competing firm from marketing their skills at lower fees than your firm charges. What do you do when someone says they’re going to the competition unless you lower your fees?
The Alternative is Within Your Reach
The Value based pricing model says to clients and prospects: “YOU are the most important thing to us. When we deliver life-changing value to our clients, and when we support the innovations and creative energy of our employees, we will prosper as a firm.”
The message to both clients and company staff is “We put YOU first.” We ensure that we deliver life-changing value to you. We apply the best resources and get the value to you in the shortest amount of time commensurate with quality.
- We get to know you: your needs, wants, and desires.
- We cultivate long term close relationships.
- We answer all your questions.
- We adapt our work if life throws you a curve ball.
- We make time and space for creativity and innovation.
Time is Not Money, Value is Money
We’ve all been poorly served by the idea that time is money. It’s time to discard that phrase and adopt this one “Value is money.”
That means that when your firm delivers value, it makes money commensurate with that value.
Punch up your goals and say, “When we deliver life-changing value, we make money.”
What is your firm doing to deliver life-changing value and to get paid commensurate with that value?
If you’re curious about how to get started, I am happy to help. We can do a complimentary Starter Call. True to its name, a Starter Call will give you one or two steps to take immediately to get started towards where you want to go. Email, or call or text 703-801-0345.