Time or Thinking: What Are We Selling?
We sell our thinking but we do ourselves a gross disservice in selling it by the hour. The surest way to commoditize our own thinking is to sell it in units of doing: time. Later in the engagement, when the strategy work has been done and we are deep into implementation work, the client buys our time. It is our thinking, however, that separates us from our competition and forms the basis of our ability to premium price. When we charge for this thinking by the hour we undo much of the work of the previous proclamations. “How much an hour?” we hear the client think. “How many hours?” When we employ commodity pricing we invite commodity comparisons, regardless of the value we deliver. The defining characteristic of a commodity is an inability to support any price premium. If we cannot win while charging more, then we must face the reality that we are selling a commodity.
Strategy is Not What but How
While our engagements follow the four phases of diagnose, prescribe, apply and reapply, it is the outcomes of the third and fourth phases that are the deliverables the client seeks. Our strategy—diagnoses and prescription—is how we do what we do. The strength of our strategic processes, rooted in our deep experience and systematic thinking, is what ensures our high likelihood of a high-quality outcome. This is the basis of the premium we command, therefore we should not be charging for it in units of time.
We must price our upfront work, right up to the first creative deliverable, in big round numbers that end in zeros, and thus clearly imply that our pricing for these services has little to do with the hours it takes to deliver them.
For the reapplication work that follows, we are free to charge by the hour. When our clients buy our thinking, however, they need to understand they are not buying it in units of time. It is not until we cease to sell these strategic services by the hour that we can truly charge more.
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