Will Uber Kill Time-Based Billing?

Why would Uber’s business model impact the standard billing method of established professional firms?

An interesting observation was made on a radio program I was listening to last night.  Apparently a number of taxi operators in larger cities in the US are now doing all their pricing up-front for the passenger before they start the trip.  This means that the old  method of turning on the meter and charging what the end result was is becoming redundant as the taxi operators have worked out that the customer wants pricing certainty.  If the cabdriver doesn’t provide it, the customer will go to Uber…

The disruption Uber has caused within the taxi industry globally has been well documented, however, it did get me thinking.

With increased penetration of up-front pricing for work that used to be based on an set (arbitrary?) rate by time, customers from all segments of the economy are going to start to question the logic of entering a transaction with no known end price.  Where very other industry is going down the path of providing pricing certainty on commencement of a piece of work, why do the professions still believe they are immune from the impacts of the change?

In many respects, the taxi industry is similar to the professions – time by rate and it doesn’t matter to the provider how many hours (or miles) are spent on a job as they will know they are getting paid “for what they do”.  The sad thing is this has been ripe for exploitation (who hasn’t been in a taxi which “took the long way” to get somewhere?)  Unfortunately, it doesn’t create a great experience for the user of the services as they just have to grimace and wear it.

Disruption in pricing and business models is going to increase and roll through many other industries and professions that used to work on the time by rate model.  Customers are experiencing more of it and are going to demand more of it.

Those firms that start on the path to pricing on purpose will see themselves gain a competitive advantage – those that don’t will wonder what the hell happened.

Have a look around the Verasage site – there’s lots of rich material in here (esp recommend a solid listen to Ron and Ed on their “The Soul of Enterprise” podcasts).

The professions are going to become “Ubered”.  I hope they are ready for it.

How to reply to a professional who gives you a rate

Friend of VeraSage, Jim Hart, and I traded a few messages on Facebook today. During one of the exchanges we had this conversation:

Jim: Buddy… this world is still upside down.

Ed: How so?

Jim: I am trying to engage a lawyer. I met with her yesterday and she gave me a “rate.” Because I thought you would enjoy that I am standing on premise, here is my response:

Ed: Do tell.

Jim: Hi NameWithheld:

I’m hoping we can work together. I have been consulting for many years. I don’t charge by the hour. As a corollary to that, I also don’t pay by the hour. You see, I’m paying for your knowledge and expertise; not your effort.

That said, my hope would be that we could meet, agree on a scope of work and you could give me a price for that expertise.

Let me know if that would be acceptable.

So far, there has been no reply. I think that this is fantastic response to the professional who tosses out a rate. If you are a potential customer of a professional firm who has just quoted you a rate, go ahead and try a version of the above reply. Alternatively, you could just go to the VeraSage List.