You’ll be happy to know that we’ve decoded the main reasons as to why charging by the hour is self-sabotage.
1. It shackles your upside
If your revenue is in any way linked to your time, your business model is fundamentally flawed. There are only so many hours in the day and eventually, you will price yourself out of your markets reach. The result is that you drastically reduce your value, throttling your earning potential.
2. It creates a conflict of interest
If I’m paying a service provider by the hour, the longer it takes them to deliver the result, the better off they are. Good for them, bad for me. Time based billing literally puts buyers and sellers at odds with each other.
And it gets worse.
3. It retards creativity and innovation
On the flip side of my previous point, the faster a service provider delivers a result, the worse off they are. If the market won’t allow you to charge more per hour, where is the incentive to do better? There is none. It’s insanity.
“Time based billing creates conflict and retards innovation, creativity and efficiency.”
4. It’s anti-entrepreneurial
Entrepreneurs strive to work on their business, not in it. If you charge by the hour, you’re literally building yourself into your business – handcuffing yourself to value delivery. If you stop working, your business stops earning which strips the value from the vehicle you’re trying to build.
The alternative to the evils of time-based billing is to convert your skills and services into value based products. The market will value a packaged result far more than it will your time.
Productisation is the process for turning your skill set into a value-producing asset and is one of the five essential ingredients in you becoming a key person of influence in your industry.
Nic Rixon (founding partner of Shirlaws with clients such as HSBC and Sony) will be sharing how you can turn your service into a product and your skills into assets, how to engage and offer value to prospects and why your product ecosystem is the key to scaling your business on April 29th in London.
