Billable Hours

In the last year I have become much discomforted about the fact that my professional work is billed by the hour. In my own little way I've started to do my proposals base on fixed pricing. I'm grateful that I have the freedom to do so. But when working for an organization that is driven by timesheets I have no other option right now then still reports my hours. (I'm saying this at the risk that some of my colleagues will read this and may not like me saying this)

About four years ago I started to realize the concept of value pricing but had no theoretical understanding of it; it was just something I did. Ed Kless from Sage Software and a senior fellow at Verasage Institute introduce me to the work of Ron Backer, the founder of Verasage Institute, at a project management course I took earlier this year. Today I understand hourly billing much better and what its fallacies are, especially after getting familiar with the work of Ron.

Billing by the hour is of no value to the customer and no risk is involved on part of the person who sells his time.

Here are some quotes from the work of Ron:

"...professionals are successful because they help people achieve their objectives. Mostly, this is a human endeavour and cannot be measured in a satisfaction survey or on a timesheet."

Ron writes about Intellectual Capital. One of them is Social Capital, "this includes your customers, the main reason a business exists....Of the three types of IC [Intellectual Capital], this is perhaps the most overlooked and least leveraged, and yet it is highly valued by customers."

"In a knowledge environment, the system should serve the worker"

Systematizing businesses trough processes is my passion and that is not for the worker to serve the system but as Ron says, “the system should serve the worker" System should create an environment like Thomas Edison once said; “there ain’t no rules around here! We’re trying to accomplish something!”

I just ordered Ron's book "Pricing on Purpose: Creating and Capturing Value". I will write more summaries base on his work.