Billable Hours or Days?

Hi Alexei,

[Some reasonable proposal]

What’s your daily (or hourly) rate?

Regards,

All right, continuing the topic of consulting. That is, the art, science and business of influencing other with some sort of advice at their request. At some point, you need to measure your presence in time units and put a price on it. What units would you use?

A day is often billed as eight nominal hours anyway. Even though it is sometimes a bit shorter, very often longer and sometimes much longer. So, does it even matter, hours or days?

I contend that it matters a lot. First, to the client, and then somewhat to the consultant.

My firm, Lean A-to-Z, Inc. always bills its clients in days. Actually, even more to the point, if we’re talking say a three-day training class, we quote the price for the class, not some number to multiply by 3 or by 24. Oddly enough, a three-day class has exactly three days, so its price doesn’t depend on time! But it should probably depend on the number of participants! It is typically a flat amount that includes participants up to some number plus some amount for each additional participant. And that’s what we quote.

The only exceptions to this policy are when we partner with other firms and agree to use different units as a formality. We’re still in agreement on how we value time and presence.

So, why does this matter?

Let’s listen to the sound of 40 billable hours

Last week you sent us one of your consultants. He put in 40 hours of work. The consultant did [a long list of activities.]

Can you explain what value we received for the 40 units of work we were billed for?

And now, the sound of 5 billable days

We recently made one of our consultants available to your organization for a week.

  • What problem did you try to solve together?
  • What questions did you ask?
  • What questions did the consultant ask?
  • Which of those questions did you find the most insightful?
  • What advice did you receive?
  • What did you decide to do with the advice?
  • What was the result?

Does it sound different now?

Connecting to my previous post, what if the number of hours in the first soundbite was not 40, but 960?

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