More from less: Hourly or “value” pricing

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I’ve enjoyed reading Brian Hill‘s “more from less” blog at http://blhill.net. In a recent posting, for example, he outlines the best and most effective marketing strategies for consultants and authorities:  Blogging, speaking, writing, and social media (and disses advertising).  On one level, I feel the “ouch” as our business continues to earn 99 per cent of its revenue from advertising sales — but I appreciate the fact that delivering real value to our advertisers is far more than the ink on paper (or pixels on the website) — in part, it is in delivering enough supplementary resources to ensure that the advertising dollars prove to be an effective investment; and free, practical and effective marketing consulting certainly meets that standard.

Which leads me to Hill’s most recent posting, where he discusses the challenges for consultants in breaking from hourly billing models, to the “value for client” pricing model — in which the consultant is rewarded not for the time he or she puts into the process, but into the measurable results achieved through the consulting effort.

This is a profoundly important concept, which professional service providers and rainmakers must appreciate to succeed.

It is also one which I discover is one of the most humbling aspects of business ownership.

For example, for the past 18 months, respecting the need to survive the recession and maintain some salary for myself, I’ve acted as the full-time writer/editor of our publications, while overseeing the business.

This is hard work.  Each story and advertising feature needs to be written, reviewed, edited and then co-ordianted in the overall picture.  At times, we have upwards of five publications going to press simultaneously.  Meanwhile, I’ve been maintaining the blog and overseeing the overall business; at times in crisis mode.  If you measure my hourly pay for this work, well, you would find it shockingly low.

Now the business has recovered sufficiently so we can begin working with an outside editor again.  Much to my relief, we’ve contracted with a competent writer/editor who is herself using value pricing.  She has assessed the income potential from work measured on a piece rate rather than hours spent, and determined she can make a decent income.  So I’ve assigned her virtually all of the writing.

Paradoxically, I’ve now gone from a situation where I needed to work 60 to 80 hours a week to a circumstance where my workload is more like 15 to 20 hours weekly.  My pay remains the same, in fact it will probably improve.  I now have the challenge of deciding how to put the additional free time to good use.

Of course, I can work on improving business processes, but in many ways our business is quite well run as it is.  We encourage independent work and autonomy, with plenty of lifestyle freedom and self-reliance, yet have some simple co-ordinating functions such as regular planning and weekly update meetings.

I could start some new projects, of course, but need to be careful these don’t distract or distort business priorities.

In a way it is amazing.  Just one change; contracting with a competent editor, has freed up something like 30 hours a week.  This is as clear a reminder as any that sometimes it is possible to work too hard .  . . but equally, I know when I needed to re-assume the editorial responsibilities in the height of challenging times, that I could save my salary — and the business — even in the most difficult conditions, by rolling up my sleeves and getting to work.  (A far better solution than bankruptcy or business failure.)

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