Ask 100 managers who use outsourced talent this question: "How do you pay your consultants?" The answer? I imagine there's a range of answers, but bet that range of answers all fit nicely into one box...it's a box labeled "Blah-blah-blah per hour."
So maybe you're asking "Yeah, what's your point?"
Well, my point is really more of a question for you:
If an alternative to knee-jerking into an hourly wage a) simplified your scoping/selection process, b) attracted higher-quality experts and/or c) reduced your project management overhead, would you consider changing your freelancer hiring criteria?
I've turned away potential clients because I would not quote my hourly pay rate for a freelance project.
Reason 1: I don't have an hourly rate to quote, because that's not how I'm paid!
Reason 2: I don't want to work for an organization (of any size, regardless of budget) that can't think outside of that hourly pay rate trap...I mean box.
Reason 3: I don't like being punished for working quickly to resolve my client's concerns, simply because I'm good at it!
To add insult to injury, many of those potential clients ordered secretaries, HR or personal assistants to call for my 'magic number' even before I met to hear about the project details! That's pre-qualification for an important project requiring consultant expertise? Thanks for the warning!
Without piling on, I believe law firms have done more than their fair share to perpetuate the 'billing hour' pay catastrophe that's polluting the consultant market. Ironically, they've been first-in-line abusers with practices like charging clients time for 'thinking about' their case, using lower-paid and sometimes free underlings to do research at 'full boat' per hour rates, etc. etc.
Same Ol' Wash, Done 3 Different Ways!
Take a project you'd consider outsourcing to a consultant - it doesn't even matter what it is - but let's say I assess it as a project I'd take on for $1500. Some crazy-making options for presenting my quote (before I was steadfast in project-based pricing, that is):
- I charge $15/hour and say it'll take 100 hours - Oh my, that's a long time! Are you sure you know what you're doing? How come you're so cheap? Are you any good? That's far too long for this!
I charge $1500/hour and say it'll take 1 hour - Oh my, your rate is insane! If it only takes you an hour, how can you charge THAT!?! You consultants are all alike!
I charge $150/hour and say it'll take 10 hours - Hmmm, that seems reasonable. Hope you get it done faster (and certainly not any slower). Let me see about getting approval for this...I'll get back to you.
Enough about me, let's think about it from your (the potential employer's) perspective:
- You have a project, a task, some 'work' you want to be done.
You either 'think' have an idea of what amount of labor it will take to complete it or you have a budget that the project work must fit within.
Pretty typical, agreed?
You have a pile of resumes, business cards, URLs - however you collect possible resources. You set up the meeting and outline the project with each one. They nod knowingly and tell you 'No problem! Can do!' and then you tee up the big question: 'So, whaddaya charge per hour?'
At this point, you (as the hirer) don't know if the rate is either high or low. Why? You need another piece of the equation which is the answer to this question (one of my 'faves'):
'How many hours do you think it'll take?'
How else can you 'back into' a project price from a per hour model?
Now, it starts getting interesting. Silence, maybe some hemming and hawing, a 'don't know' and if you're really lucky, a range. Your hot-shot 'expert' all of the sudden starts squirming or at the very least gets a little vague! How quickly your cocky gunslinger disappears...even Chris Angel would blush!
So, after Round One of qualification you've got a smaller pile of qualified 'experts,' rates for each and an open-ended project estimate. Yet, the longer it takes to select one, the closer that deadline becomes. What you really have, in a word, is hope (vs. confidence) - hope that your project will work out not only on time and but also on budget!
Unfortunately in business (or if you worked for me), 'hope' is not a strategy!
What To Do?
I bet you already know the answer to this one...ask for (okay, demand if you have to) 'project pricing' for every single project you put out to experts. Every single project.
Uncomfortable with that? Then perhaps you should continue being comfortable biting your nails every week, hoping that those hard-to-audit 'billable hours' on the invoice you have on your desk actually translated into tangible deliverables. That's the reality - and one that many, many hirers live with every day as they empty the bottle of antacids on their desk.
Don't get me wrong, my fellow experts-for-hire aren't inherently crooked or even sloppy. I'd reckon most are the straightest of shooters. But shouldn't you expect more from what should be some of the better talent out there? Let the record reflect, I believe so.
The time you spend with fewer experts willing to design a solution for you with 'no surprises,' project pricing will pay off for you both immediately and in the future.
Mark Morton is The Service Silverback...an expert resource helping small- to medium-sized businesses thrive in the toughest markets.