May 28, 2017

Value pricing is not evil

This weekend, some folks on Twitter pointed out that lots of people in the Wordpress community think value pricing is evil.

Literally, the word “evil” was used.

After years of evangelizing value pricing, I’ve come to expect this sort of visceral reaction from folks who have been billing by the hour for any length of time. It’s a natural threat response.

Fear and anger are common reactions to having one’s status quo challenged, especially when that status quo is flimsy.

I specifically say “flimsy” because I’ve never met anyone who bills hourly who conciously decided to bill by the hour.

Consider Bob

When Bob first started out, he didn’t ask:

“Should I bill by the hour?”

...but instead he asked:

“How much should I charge per hour?”

He just subconsciously assumed that hourly billing was the only choice. It didn’t even occur to him that there were other options, or even that he was making a choice at all.

After a few years in business, the hour billing mentality has completely taken over how Bob manages his client relationships. He believes that all clients are micromanaging cheapskates.

What Bob doesn’t realize is that hourly billing encourages that sort of client behavior. He has nothing to compare it to so it skews his world view.

Hourly billing had also entrenched itself in Bob’s business systems. He has spent countless hours putting in place tools for proposal creation, time tracking, invoicing, and so on. They are all based on hourly billing at a foundational level and are therefore incompatible with a value pricing approach.

What Bob doesn’t realize is that hourly billing is what necessitates these systems. With value pricing, proposals can be created with a handful of short templates; time tracking is moot; and invoicing can be done manually because it happens once or twice per project, if at all.

So when I saunter onto Bob’s radar with some provocative tweet about hourly billing being nuts, Bob has a knee jerk reaction. He gets angry. Sometimes, REALLY angry. He’s DEEPLY invested in hourly billing without ever having rationally considered it at all.

It’s like Bob has been building a house of cards for years, and then I walk in with a blow dryer in each hand.

Remember This

I’ve boiled this concept down to an abstract that I use to diffuse anger in myself and others:

“He who builds on a shaky foundation is easily angered by small disturbances.”

When I get angry about some random comment on the interwebz, I ask myself if the root of the emotion stems from my own faulty assumption. More often that not, that is the case.