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Hourly Billing is Dying — May It Rest in Peace
We should charge and pay for value, not time
Time is one of our most valuable commodities, and that it’s a non-renewable resource makes it even more precious. But knowledge is also a valuable commodity. If you offer a service, are you balancing time and knowledge when you determine your fees?
We’ve all heard the story of the plumber who charged $500 for spending five minutes to analyze a problem, then fixing it with a few taps on a pipe. When the indignant customer questioned paying $500 for such a quick and simple solution, the plumber explained, “You paid $50 for me to come out and tap the pipe — you paid $450 because I know where to tap.”
The value of a service isn’t in how long it takes you to do it, it’s in the benefit to your customer.
Technology in general and artificial intelligence (AI) in particular have made it possible to do in minutes what used to take hours and even days. Of course, this doesn’t apply to everything — I don’t think technology could have helped the handyman who recently replaced a toilet in my house do it any faster. And when I book an hour with my massage therapist, I want him to work for an hour.
