Hourly Billing & The Treadmill

Jay Owen Business Tips, Company Leave a Comment

I’ve been running a lot more lately, not because I like it, but because I need to. I do some of my best thinking while I’m running and today I realized that hourly billing and the treadmill have a lot in common

The goal today was to run for 30 minutes. I don’t like to run for time, I prefer to run for distance. When you run for time, there is no incentive to go faster or at a higher incline. The goal is simply to run for 30 minutes. Now “running” for 30 minutes at a 4 mph pace is very different than running at a 7 mph pace. But if the goal is to just last 30 minutes, there is no incentive to go faster because it’s going to take 30 minutes regardless of how fast you are going.

I like to run for distance because it pushes me to get done sooner. You can run 3 miles in 30 minutes or you can take an hour to do it. I’d rather get it done and over with. I’d rather do it well than drag my heels all day about it.

Hourly billing is just like this. Some folks take an hour to do what another can do in 10 minutes. Should the person who can do it in 10 minutes be paid less than the person that takes an hour? Absolutely not. That’s why VALUE billing (or project billing) is far superior to hourly in most cases. While the amount of time something takes can sometimes indicate the value, that’s not always true. The experience and expertise of one person can allow the project to be completed in far less time which is actually of MORE VALUE than taking longer to do it.

If you’ve never run, you can’t just jump on the treadmill and run 3 miles at a 7mph pace though, it takes time and experience. The more you run, the better you get at it and the faster you can knock down the miles. This goes for all kinds of work too, the more experienced someone is and the more time they have invested in a skill, the better they are at it. As a result, they can often complete a task much more quickly than someone who is newer.

Value billing is more specific, you get X for Y, there is no guessing involved. Same thing goes for the treadmill, if someone says they’re going to run for an hour, that doesn’t mean much unless you know how fast they can run.

Now I know that value billing or project billing doesn’t always work. If the scope of the project is very loosely defined or it’s a long list of maintenance type updates, hourly billing may be the only way to manage it, but for most things, we prefer value billing because we’d rather get it done and get off the treadmill.

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