Don’t Sell Inputs. Sell Results.
Categories: Uncategorized
Work is often valued on the number of hours you put in. It’s complex to price work on a per-project basis. It’s easy to set an hourly rate as opposed to pricing on a per-project basis.
However, there is a hard limit to return when working on an hourly basis. I was recently challenged to change the way I value and price my work, this quick comment has triggered a significant paradigm shift over the last week:
You have to move to be outcome driven. Stop concentrating on inputs.
All that matters is the outcome. Most of the time it doesn’t matter how you get there, as long as the goals are met (hopefully surpassed!), timelines hit, and executed within budget constraints.
Growth comes from delivering results where:
- Pricing is not based on input (hours)
- The input needed to deliver results is significantly less than the competition
In this case, both parties win. You profit from the knowledge capital you’ve built in a specific skill set.
I prefer a fixed cost approach also. I’ve been on both sides of project development and think that it is best on both parties. However, the problems come when the expected outcome is unclear or changes.
When faced with changes, I for one find it hard to clarify that it will be extra costs.
If there was a quick way to agree on compensation due to changes in scope without halting development, the outcome model would be ideal.
Good point, Nate. Things get complicated quickly when project scope changes.
Fixed cost model doesn’t work for all projects, but when possible, results vs inputs is definitely the way to go.