I’m a big fan of value billing. This is where I bill for a project and don’t bill by the hour. You know what you’re going to pay and I know what you’re going to pay. My incentive with value billing is to produce the best work I can in the least amount of time.
You get to decide whether the price I’m proposing is fair and if you’re going to get an adequate return on your investment. Value billing allows you to know the price up front. You won’t have to wonder how many hours I’m spending or whether I’m learning at your expense.
Why value billing works
Value billing works best for both parties when your provider is an expert in what they’re providing. I know that when I’ve done a similar project several times, I know approximately how long it’s going to take. I know how much time I’ve invested in learning and I know how to pro-rate my learning time in my fixed price bill.
If your project happens to be something I haven’t done before I have two choices. I can decide to learn what you want and not charge you the full cost of my learning or I can refer you to an expert. In most cases I’ll refer you to an expert.
When I first starting developing my expertise in the niches I serve I spent a lot of time learning on my dime. This was an advantage to those I worked with. They weren’t paying me to learn. They were paying me to produce a result.
The collaborative result
When I refer your business to a specialist I don’t just step away and let them do the work. I stay involved.
There is almost nothing I don’t have expertise in when it comes to the wealth management world. At the same time there are certain things where there are others who are much more competent than I. An example might be running a client advisory board. I have a collaborative partner (Steve Wershing) who is much better at this than I. Why would I want to do this for you when I can have Steve provide a much better result for you?
Niches and value billing, a match made in heaven
When your provider provides you value billing and is a niche specialist you get the best of both worlds. You aren’t being charged to learn because your provider already is an expert. You are getting a result that’s produced quickly because your niche expert already has spent time and effort to learn what you want.
You might end up paying a little bit more, but isn’t a great outcome what you’re after? The niche expert provides you with years of experience and in many cases years of education on your issue as well. If your advisor is an expert do you think there’s a possibility they can even provide you with a result that is better than your average advisor?
For me being a niche provider means I understand the issues you are facing. As a client, using a niche provider allows you to get expertise from someone who sees your problem on a regular basis.
Would you rather have a surgeon who’s done an operation hundreds of times?
This is where niche expertise is most appreciated. I know that if I’m getting a surgical procedure I don’t want someone just learning. I want the surgeon who has successfully done the procedure hundreds of times.
That surgeon is likely to charge a higher fee. He or she will likely spend less time than a newbie doing the same procedure. They’ll also get a higher hourly fee, which you don’t pay because you’ve agreed what the cost will be. If the surgery is successful and you get the outcome you want, do you really care? I know I wouldn’t.
I recommend that you look for a provider who is a niche expert and charges a value based project fee. At the end of the day you’re likely to be happier and get the outcome that you really want.
Oh, and this just might hold true for how you present your service to clients you want to serve. Does this make sense to you?