Why Time & Material Is Dead
I will officially end customer-facing hourly rates as of 31.03.2020 for my business.
Not primarily because I mind earning CHF 200 per hour for chargeable work.
But because I feel that hourly rates are the wrong pricing mechanism to pursue for SalesPlaybook (and nearly any other business) for 3 reasons:
1) Incentives: Startups want me to help them hit Product-Market-Fit and scale up sales faster without hiring expensive sales reps. They want me to solve this problem as fast, affordable and sustainable as possible. Any such collaboration should be strictly outcome- and not input-oriented. (Dear Founder, if you focus on my input & price instead outcome & value, we are not a cultural fit. Sorry. Not sorry.)
Being paid by time spent means my financial incentive is to spend as many hours as possible at the highest hourly rate possible, as many days per month as possible. And yes, I’ve been there via corporate consulting, but also with my business in 2019. So I get it, it works, it makes money. But see above and below why I am not a fan.
2) Asset Creation: You can read this and my 20+ other Medium articles anytime, anywhere, in this case even free for everybody. The same is true for any B2B Startup Sales template, article, video, toolbox, process, script, etc. I create. The marginal costs to share digital assets are much lower than the marginal costs to share my time.
My time is finite and has therefore opportunity costs, which I need to pass on to customers if I want to pay rent and make up for the time not creating assets in this time.
3) Robustness & Scalability: As in a previously published article 1-Year Anniversary, Still Day 1 outlined, operating as a single founder holds a significant “bus-risk”. If I as the founder and only employee die by getting hit by a bus, the business dies with me. And running a service business scales only with its available capacity. And yes, I still do not fancy hiring fixed employees.
2020 is still young, so stay tuned for further updates on https://thesalesplaybook.io or reach out anytime via LinkedIn or manuel@thesalesplaybook.io if I can help you. Thanks for reading & all the best!
P.S. I wrote this article within 30min so might update it with a more detailed version in the next days or weeks.
