Sent by Jonathan Stark on September 16th, 2016
The following commentary on the old adage “An honest day’s work for an honest day’s pay” made me LOL (emphasis mine): Many people are familiar with this saying that means that if you put in an honest day’s work, you will be paid an agreed amount, or an ‘honest day’s pay’ for doing so. Work hard and you may get a raise or a promotion. However, if you think about it, if you are paid per hour and you don’t work as hard, you are actually getting a raise.
For the past few days, I’ve been ruminating on the fairness of value pricing vs hourly billing or fixed prices based on cost (i.e., time and materials or cost plus prices).
There are a few themes that keep cropping up in my investigation but the one that got me thinking about the adage above is this: Are fairness and honesty intrinsically linked?
The jury is still out, but my working hypothesis is this:
Folks who believe that value pricing is unfair to the client might be imagining that they have to engage in dishonest behavior to implement it.
For example, “tricking” the client into revealing the budget and then simply presenting that number as the price.
For the record, this sort of behavior is not required for value pricing. You don’t trick anyone into anything; quite the opposite, in fact.
The line of questioning that I use in sales conversations (aka The Why Conversation) is meant to dispel illusions and uncover the true motivation for a project.
Without knowing the client’s true motivation, I have no hope of reliably delivering high customer satisfaction.