{"id":51413,"date":"2017-05-15t05:00:09","date_gmt":"2017-05-15t09:00:09","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=51413"},"modified":"2017-06-21t22:50:36","modified_gmt":"2017-06-22t02:50:36","slug":"old-pricing-models-unethical","status":"publish","type":"post","link":"\/\/www.g005e.com\/2017\/05\/15\/old-pricing-models-unethical\/","title":{"rendered":"why old pricing models are unethical"},"content":{"rendered":"
<\/a>listen to the marketplace.<\/strong><\/p>\n by rob nixon<\/i><\/p>\n i am using the ethics card right up front to get your attention.<\/p>\n more on strategy:<\/b> 8 ways to become super-efficient<\/a> | boost efficiency and your bottom line<\/a> | 4 sales systems and some secret sauce<\/a> | marketing must generate leads<\/a> | be an ‘object of interest’<\/a> | marketing must be about sales<\/a> | turn your knowledge into products<\/a> | why clients really stay<\/a> | 8 ways to build team engagement<\/a> | how to create 4 new billable hours per day<\/a> | do you know what clients want?<\/a> | is your business by design or default?<\/a> | the world is flat<\/a> | the profession disrupted: compliance commoditized<\/a> i personally feel that pricing by the hour in arrears is an unethical way to price. here\u2019s why: when you price by the hour you are not incentivized to be as efficient as possible and get the job done super-fast. in fact, you are directly incentivized to do the task slower. you are incentivized to overanalyze and take your time. you are incentivized to pad out timesheets and in some cases make mistakes.<\/p>\n and it gets worse when management (aka partners) actively promotes and measures productivity, utilization and billable hours targets. i\u2019ll give you 6.5 hours a day charged to the client says the eager accountant who wants to impress. i\u2019ll go a little slower and i\u2019ll do things in the job that i didn\u2019t need to do. i\u2019ll even leave the clock running as i go to the bathroom. i\u2019ll start the clock as i am driving to the clients\u2019 office. i\u2019ll keep it running as we have lunch together. and seeing we charge in 6-minute units then if a task takes 45 minutes i\u2019ll just round it up and charge 8 units. with all that (the eager accountant says) i got my daily target.<\/p>\n is there anything more unethical than that? at this point in time you may think of sending me some hate mail. that\u2019s ok; you\u2019re entitled to your opinion.<\/p>\n seriously, though. pricing by the hour for professional services has got issues written all over it.<\/p>\n other than what i have mentioned earlier here are some more examples:<\/p>\n and lastly, what about the poor client? they have no idea what the bill will be until it arrives.<\/p>\n i understand that nearly every other accounting firm in the world does it this way. i understand that\u2019s the way it\u2019s been done for centuries. it doesn\u2019t mean it is right.<\/p>\n i think since the introduction of the computer on everyone\u2019s desk in the 1990s the issue has been exacerbated. the introduction of the background timesheet and electronic timesheet has fueled the unethical fire.<\/p>\n i think there is only one option forward. that is to tell the client the price and scope of every single project in advance and in writing. the client signs off on the price and scope and you get to work and do the job as efficiently as possible. that\u2019s it. nothing more, nothing less.<\/p>\n now you can get creative with this and give your clients an enhanced version.<\/p><\/blockquote>\n you could package up a number of services (known ones) and give your client an “annual accounting service” that is an annual fee divided by 12 to get a monthly fee. then have a direct debit authority for the monthly fee.<\/p>\n you could promote known services into packages on your website. it\u2019s the old “small, medium and large” idea.<\/p>\n
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