Everything we as consumers buy we know the price upfront. When I go to the grocery store with a grocery list in hand and by the time I have gone through the checkout process I will know exactly what I paid and the value I have received in return. We all make price/value assessments before we buy, not after.

It is rather common for professionals (e.g Accounts, Lawyers and IT companies) to sell services by the hour.  The billable hour violates the economic law mentioned above at the most basic level. Any business engaging a professional paying by the hour is helping the professional measure his or her efforts, not the results that will be achieved. This is perhaps not only a hard concept to understand for the professionals who bill by the hour but also for the business owner who is oriented towards efforts and not results in his or her own business. Being results oriented is a direct manifestation to being value oriented. According to Ron Baker from Verasage Institute the word value has a specific meaning in economics: “The maximum amount that a consumer would be willing to pay for an item.”  He goes on to say, “therefore, value pricing can be defined as the maximum amount a given customer is willing to pay for a particular service, before the work begins.”

This is why I price all services upfront we perform for customers at Interaction Versa, before the work begins. I do my due diligences to see if I will be able to help a customer upfront without them having to commit to anything. My due diligence goes further than simply proposing to see what will stick. My first method is always to find out who it is that I will be proposing to. Is it a business owner who is efforts oriented inside of his or her business or in to achieving results for his or her customers? It goes without saying that the latter business owner will have happy and engaged employees. There is a night and day difference between the two business owners. The first business owner is usually someone who has high expectations of staff/employees and equally so for vendor sources but the expectations are poorly defined or spelled out, if at all.  The second business owner is also someone who has high expectations of staff/employees and vendors alike but the expectations are well defined and everyone knows them even without being directly told. It is just simply visible when engaging the latter business owner! The second business owner will have clear results he wants to achieve be it short term or long term.

If you are a result oriented business owner or becoming one here is a video that demonstrates as to why you should not buy your professional services by the hour.