Last week I received an email from Ben Meredith of B&B Consulting Services in Ashland, VA. In the email Ben wrote of his transformation to a PKF, "The biggest change for me was the realization that I don’t have to have the clock running all day – once that stress was gone I could begin to work on creating value for my business and my customers."
Well said! I asked him to write a few paragraphs and share his story. Like all of the others, it is excellent. Enjoy!
Let me begin by confessing that I have actually had the experience of using a time clock at work. Mechanical. Huge. Ugly. Green. It was many (many) years ago at one of my first jobs in IT although they didn’t call it IT back then. I believe The Machine Room was as close as they came to naming that strange room in the back of the building with all the blinking lights.
That green metal box hung on the wall just inside the main office and sounded like it had been hit with a hammer each time a time card was inserted. When I took the job I was told to "just punch in and punch out" – how was I to know that it had selections like day of week and lunch time.
Consequently my time cards were fairly unreadable by the end of the week. Many hours were spent deciphering the over-strikes until I finally convinced my boss that I had just never seen one of those horrible things before. Thus began my love/hate relationship with time billing.
Looking back I guess that everyone then knew how a time clock worked – just as we now expect everyone to be computer literate. I just wasn’t time clock literate. Luckily my next employer had time sheets for me to fill out each week. Or copy from the preceding week as most did.
My partner and I finally struck out on our own forming a company that filled the needs of local companies needing good programmer analyst skill sets to initiate or complete mainframe programming projects. And from there to mid-range and mini-computers… Novell and Microsoft networks and finally cloud computing.
And most of time we were billing by the hour. After all, that was what customers expected and it was certainly the road most traveled. Rarely were you not considered for a project because you billed by the hour. In fact there seemed to be so many horror stories of incomplete projects and failed businesses that anything but hourly billing was considered risky.
I can recall more than a few Monday mornings in my office; working on sales forecasts or resource planning and suddenly thinking "Wait! I’m not billing! I have to have the clock running!"
I had developed the mindset that if the clock was not running and I was not billing then bad things were on the horizon. At best I could visualize fixed costs running like fine sand through the hourglass.
And I can still remember the day I was in a customer’s office and talking with the bookkeeper about a report she needed when the CFO walked by and simply said to her: "Stop talking to him – we’re paying him by the hour!"
All in all though, I think I was more stressed by hourly billing than my customers. Too many hours were left un-billed at the end of the month because of lack of attention, multi-tasking or just that feeling that I had to stay within a perceived budget figure someone had mentioned when the job first started.
There had to be a better way to deliver professional services to customers. My search for answers began with an introduction to the works of Alan Weiss. A few books and videos later I was convinced that hourly billing was dead – I just didn’t know yet how to bury the beast in my own company. That didn’t keep me from trying but my progress was slow.
Mentors were almost non-existent and I could find no one to brainstorm with who did not use time as a metric for estimating project and billing customers. Many people acknowledged that value or fixed pricing was the right approach but I knew of no one who was actually practicing this in their business.
About a year later at a Sage Insights Conference I found myself in one of Ed Kless’ sessions on Value-Based Pricing. Finally someone in my industry was not only saying that value-based pricing is the way of the future but also showing how you can implement it in your business.
It took a few more of your seminars and a lot more work before things started to come together. I did spend a lot of time reading Ron Baker’s material at VeraSage and listening to his recorded seminars (along with many others). In the end I realized all the ingredients were there. It was more an exercise on how to create the recipe that worked for my organization.
Value based pricing is now bolted down for good in the company. I locked the door on hourly billing for good December 31st. Everything since has been and will only be fixed/value based engagements.
I have a couple of long time customers that are still being billed hourly but there is a process is in place to address these as well as casual consulting engagements.
Looking backward I wonder how I could have overlooked the obvious in my proposals and billing practices over the years… could it be that 20/20 hindsight I keep hearing about? My customers really like fixed prices; they can budget for each project and get to approve or disapprove any additional services or expenses before they occur.
I get to spend more time working on both my business and my customer’s business. When I am on-site we are working together and building stronger relationships and nobody is looking at the clock. And I don’t have to be concerned about always billing hours… only about the projects being on time and building value for my business and my customer’s business.
And that makes all the difference!
B & B Consulting Services