There has been much discussion recently among business software VARs about how to price our services. The traditional method has been hourly billing. How long does it take the consultant to do the work? Others are now saying we should scrap time tracking and should use “pricing on purpose” or value billing. What is the solution worth to the customer?

Those who want to get rid of the timesheets say it creates the wrong incentive, and could tempt some people (always not you, but others) to pad their hours. Opponents of value pricing say it creates an incentive for customers to minimize the value.

Both of these arguments point to the same thing, but never seem to discuss it: TRUST. We received a letter a few years ago from one of our allies (isn’t that a better word than customer?) which included the following:
“You have served us so well that we are convinced you are indeed a partner, an ally. I don’t think you could have taken our interests more to heart if you were the sole owner of the company; that is how confortable I feel in not only your technical support but also the recommendations you make on purchase of new/additional software.”

With this ally we do much of our work on an hourly basis. Sometimes on a project they will ask for a quote up front so they can figure out if the ROI is there to do it. Either way, they trust us to do quality work for a reasonable price, and we trust them to provide us honest answers to our questions so that we can make the system work for them efficiently and effectively.

They trust us, we trust them. The unit of measure on the invoice doesn’t matter.

Leave a Reply

Your email address will not be published. Required fields are marked *