The beauty (and wisdom) of Value Pricing is that services provided to, and received by, customers are fully customized. Customization fulfills a basic human need to be connected and to feel special. Fill a seminar room with 10, 100, or 1,000 professionals from all branches and they will almost unanimously agree with the horrors of the time sheet, of the pervasive inequity of hourly pricing, of the demoralizing results to a team of articulate and educated knowledge workers who are measured like an office assembly-line factory worker, and to the wasted (hence inefficient) use of firm talents to track and monitor and justify and think about all of the permutations associated with their beloved time and billing system. Yet, although they trot to the pond, gaze upon the crystal clear nourishing waters, the vast majority retreat to the ultimate comfort of what they know……….billing by the moment.
Why is it that really smart, essentially logical and well educated people, are able to acknowledge a better path, a brighter future, a more enjoyable life do they ultimately turn their hearts and minds off to commit the ultimate mentacide (killing of the brain) and keep doing what shouldn’t be done?
It may simply be that the paradox of Value Pricing is that the unconditioned brain tires too easily when forced to consider options. The paradox is that hourly billing is simple. It is Rate X Hours=Price (well at least as a start since nearly all firms never achieve their RxH, they receive closer to 80% of RxH – but that isn’t the message for this post). Hourly billing is simple. It is redundant. It is easily expressed. It is easily taught. Hourly billing has all the trappings of VD. It is easy to catch and damned difficult to get rid of. Logic, like antibiotics can only help so much and so often. The root cause of the disease is the rampant bad behaviors of the carriers (Managing Partners, Partners, Brown-Nosing Partner Wanna-bees, most Charlatans that masquerade as Consultants, and large software providers that like to write simple code rather than complex code). Since we can’t easily destroy the disease carrying hosts (DDT was outlawed years ago) (DDT = Dynamic Disruption of Totalitarians) – Since we can’t easily eradicate the hosts, we must find alternative treatments.
The initial treatment is to simplify. To allow the unaccustomed mind time to get into VPC (Value Pricing Condition) — like the marathon runner who started with walking, jogging, 1k, 5k, 10k, 15k, 10k, 20k, 10k, 25k….until she reaches 26.2 miles of endurance, we must start out slow and simple. Although the logical mind likes the concept of choice and choosing, the survival brain doesn’t. As the Otis Redding lyrics said – “I can’t do what 10 people tell me to do, I think I’ll go sit on the dock of the bay”. When confronted with choice and option, it requires more energy then many are capable of investing, so the default is to do what has always been done. Hence they live inside a Firm of the Past rather than traverse to a Firm of the Future.
Never mind that these same professionals will agree that their decision is wrong, like an overweight person that wants to diet but chooses not to, the investment is beyond their current capacity.
So, how does one start on the journey of the VPC? Simple. On day one – choose to simply invoice all customers for their next fiscal year of services equal to their price in the current year and perform all of the same services, lock stock and barrel. This may not be elegant but it is simple. It is clean. It is clear cut. If you are risk adverse, add 10% to cover inflation, and your fear factor. Stop using your timesheet for all billing activities, and free up your day (and your team’s day) –
Think about it. If you are “an average firm” with “average people” (you know, the kind that bill by the hour, that write down more than you write up, and measure all of those balancing scorecards – face it you are average and mediocre) you will free up 30 minutes or more, per work day to spend on more fun activities like………..sleeping, reading, FaceBooking, Tweeting, avoiding porn-laced spam (unless you privately enjoy your porn-laced spam – just be smart and don’t share it at the office or you can spend quality time with lawyers who will most likely bill you by the hour and trust me that will treat you like you have been treating others – so maybe you should go ahead and freely share that pic-of-the-day your cousin sent you with your colleagues) – or, heavens sake, a conversation with your customers to learn more about them, to help them create their future, and to boldly become the penultimate advisor that is harboring in your DNA – but has yet to surface because of your disease.
The Paradox of Choosing is a significant barrier facing all of us. Too many choices leads to maintaining a comfortable habit even though it is killing me. Too many choices creates a world where you put off until tomorrow what you should start today. And we all know that tomorrow never arrives. The disease has us. The habit has us. We need a cure and the cure is a simple switch to a simple system where you free your mind to get into Value Pricing Shape by removing the inherent challenges of figuring out the perfect way to transition and hence stuck with too many choices – and choose a simple one and move on it. Trust in yourself. You will never look back and think you should have stayed with a timesheet and its cousin, hourly billing cancer.
Challenge your brain. A marathon begins one step at a time. The Firm of the Future begins the same way.
Now – call me (or anyone of us) and we’ll help you train for the best race in your professional life.