Why your IT business should sell value, not time
Years ago I heard a fictional story about a rich Sultan who had built a magnificent steam powered boat. Taking months of labour and many thousands of Gold pieces to build, when completed the Sultan stood back to admire his amazing new boat before taking it out on the rivers surrounding his City.
But within weeks, the boat suddenly and inexplicably stopped working. The steam wasn’t powering the boat, and the boat sat in Dock motionless. The Sultan called engineer after engineer to examine his boat, each one spending hours but unable to find the issue. Exasperated, the Sultan asked for recommendations of engineers outside his City and heard of an old engineer from many miles away who had built a reputation for expertise and excellence.
The Sultan sent word for the old engineer to visit him, offering vast riches if the engineer could resolve the issue with his boat where other engineers had failed.
The old engineer visited the Sultan’s boat and the Sultan watched as the engineer walked the engine room, looking around for the problem. After 10 minutes the old engineer nodded to himself and asked the Sultan to pass him a hammer. Lifting the Hammer, the engineer gently tapped a pipe and suddenly, steam started flowing. The engine of the boat sprang into life!
Exclaiming his delight, the Sultan turned to the old engineer and asked him what his fee was for fixing the boat. “5,000 gold pieces” said the Engineer. “What! You can’t be serious! You only spent ten minutes here working and then simply tapped a pipe with a Hammer!” exclaimed the Sultan. “Indeed I did, but I knew where to tap the pipe”.
The Sultan paused and then nodded, understanding the old engineers meaning – paying the engineer his 5,000 pieces before returning to his working boat.
Does your IT Business sell time, or value?
Although the above story is fictional, many IT business owners who are reading this will understand it’s meaning. The work you deliver for your clients should not be based around the time that you spend with them – it should be based around the value you provide to them.
Take Defragmenting a disk drive, for instance. The act of defragging a Hard Disk takes mere seconds to start, and is usually finished within an hour – but the benefits it provides to a client are faster working PC’s and the ability to get more work done with less interruption. Because a disk defrag only takes a few seconds to execute, should you only charge for a few seconds worth of your time?
Taking that example further, once you implement a Remote Management & Monitoring (RMM) tool – you can press a single button and execute a defrag on every machine within a clients organisation. Again, should you only charge for the time it took you to press a single button?
Absolutely not. The value to your client is not the time you’ve spent pressing the button, but the fact you were experienced enough to know that defragmenting their PC’s regularly would yield benefits for them in reduced frustration and increased efficiency from their PC’s running faster.
Quite frankly, the client couldn’t care less about the time you’ve spent undertaking tasks for them – they just want to benefit from the end result.
If your business is selling time, then as you get more experienced and able to complete jobs faster – you’re actually going to be paid less. Then, the only alternative to increasing your income is to sell more of your time – and fairly quickly you’ll realise that we each all only have the same number of hours in the day.
If your business is selling based on value, then you’ll be able to scale your work – reducing the time it takes to deliver that value and adding value to many more clients.
So the next time you consider what you should be charging a client, don’t base your calculations purely on the time it takes you – consider what value it brings to the client instead.