March 29, 2022
Why don’t you do hourly billing?
If you’ve been billing hourly for a while and are new to non-hourly approaches (e.g., value pricing, productized services, advisory retainers) you might find yourself stumbling when someone puts you on the spot in a sales meeting and asks:
“Why don’t you do hourly billing?”
Here are a bunch of responses for you to consider... pick your favorite and memorize it:
The classic Alan Weiss response is...
“I don’t feel that clients should have to make an investment decision every time my assistance is required”
But you could also say:
“I believe that clients should know in advance how much an engagement will cost.”
“Do unto others. When I buy something, I like to know up-front how much it costs. So that’s how I treat my clients.”
“As a professional, I take responsibility for my estimates. Why should a client pay more because I underestimated the level of effort?”
“I don’t know exactly how long any given engagement will take. As a professional, charging clients more because I underestimated the amount of work seems unethical to me.”
“I have found that clients like to know how much my assistance will cost before making a purchase decision. This is impossible with hourly because you never know exactly how long something will take.”
“I have found that clients REALLY don’t like it when projects go over budget, especially by a lot. By giving fixed prices, I can ensure that that will NEVER happen.”
“My ultimate goal here is to deliver 100% customer satisfaction. I can’t reliably do that with hourly because my fee is essentially unbounded. If this ended up costing you twice what I estimated, you probably wouldn’t be very satisfied.”
I could go on, but the fundamental point behind all of these lines is this:
Hourly billing is bad for the client.
Many clients are used to hourly billing and therefore expect it, so it’s up to you to snap them out of the delusion that it’s the best (or only) option.