Why billing by time is the enemy for Professional-Service Businesses?
joe
Traditional marketing for service-based businesses is a challenge for any business owner, you need to immediately showcase your value, and then put a dollar figure to what your time is worth. Marketing a serviced based business is one of the most difficult areas for a marketing professional, but that doesn’t mean it can’t work, you just have to work it harder.
What is a service-based business?
A service-based company typically is any company that sells time as its product. Examples are legal and accounting services, Doctors, physiotherapists, life coaches, counselors, architects and management consultants, to name a few.
When a company must sell time as its unit of measure, you need to be very clear to the client what they are receiving for that fee.
For example, an accountant will change by the hour and may produce an estimate to do the work.
A lawyer can never guarantee how much its going to cost to resolve a matter – they can only use past experience to estimate.
Life coaches charge by the hour and after the hour is complete may or may not have achieved the goals and then are placed in a dilemma to continue or to ask to charge more, or is it worse stop in the middle of a session and tell the client we will take this up next time leaving the client unsatisfied and undervalued?
The traditional model of selling time is a one-way road to dispute, disappointment and loss.
When time is the value being sold, the question in the eyes of your client is what do I get for your time? How long will it take for you to do this job. What happens if it goes over? How much extra is this going to cost? Or worse still get the job done and then send a huge invoice which is going to be questioned.
The difficulty serviced based business have is that in not defining your value of your offering or outcome of your work, you create confusion for your clients who are never sure of what things costs or what they are getting for their money.
The traditional model of using time as the only measure of value, means that you have effectively commoditized your product. You create uncertainty and insecurity and apprehension. The very thing a good brand seeks to avoid. A great brand seeks to deliver a great experience that is built upon promises.
A great way to create a successful brand for a serviced based business is to productize your service. That is to package time and expectation and experience in one price.
For example, an accountant can charge by the hour to get a tax return done, or he can advertise a flat fee for a successful tax return. The second has proven to be successful because client understand the costs the outcomes and the value.
The more a serviced based business can productize its offering, the better its able to deliver a higher level of client satisfaction.
Australia’s booming professional services sector
According to AFR, Australia is fast on its way to becoming a professional services nation – the business services sector is becoming more important to the economy and a much larger employer, as industry becomes increasingly specialised and more willing to have non-core work done by external providers.
This change has come about, in part, because new technology has pushed down the costs of communication and logistics, and allowed a range of processes to be automated, according to the head of the Reserve Bank's economic analysis department, Alexandra Heath.
The business services sector now employs about 20 per cent of the workforce – one in five of all Australian workers. [i]
Icon Visual Marketing has extensive experience consulting to professional services firms, focusing on customers needs and value to deliver strategies that have proven effective. Contact us now by calling 1300 138 984 for a free one-hour marketing consultation to see how we can grow your business.
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