Sent by Jonathan Stark on November 26th, 2017
Folks who have oriented their entire business (e.g., culture, processes, systems, etc) around hourly billing have a hard time grokking my “hourly billing is nuts” message.
I got the following question from a long-time hourly biller who had just heard my “I’m on a mission to rid the world of hourly billing” mantra:
Is the change to remove hourly billing altogether…or could it be to create systems / clarity to ensure that it aligns with the value of work being performed?
This sort of question is both extremely common and completely bonkers.
Suggesting that hourly billing could be made to align with value delivered indicates that the person making the suggestion doesn’t understand the concepts involved.
It’s like suggesting that you could successfully draw three perpendicular lines if you try hard enough.
It doesn’t matter how hard you try.
It is a logical impossibility.
Improved systems and clarity might help you hit your estimates, but that has nothing whatsoever to do with the value delivered.
Billing by the hour is a cost-based method that only reveals the actual price once the work has been completed.
If the resulting price aligns with the client’s value, it’s purely coincidental.
Therefore, there is literally no way to ensure that the price a project billed hourly will align with the client’s value because the client’s value was never part of the pricing calculation.