[IxDA Discuss] hourly rates, price and value

[Elizabeth Bacon]

Performing IxD consulting according to a per diem rate is a  
destructive practice, both for the client and the consultant.  
Charging by the hour essentially encourages the consultant to go  
slowly (which is bad for client) and work all the time (which is bad  
for consultant).

Instead, the use of project-based &/or deliverable-based fees erases  
these issues, and simultaneously encourages a stronger perception of  
value for our IxD work. It establishes an appropriate consulting  
relationship wherein the client is unafraid to refer to the  
consultant's expert knowledge (because they are never sitting there  
thinking, "Should I call her about this issue? But I'd have to pay  
[$x] just to talk with her...nah, forget it, this time we'll figure  
it out ourselves").

I've picked up these insights from reading consulting guru Alan Weiss  
in the context of starting my own consulting business. You can check  
out his starting book called "Getting Started in Consulting" where he  
outlines the principles of "value-based consulting". His philosophy  
about hourly rates really connected with me, as you can tell. And he  
has other helpful insights about how you want your new clients to pay  
more than your old clients -- because of course you should get paid  
more as you get better at your work, and it's inappropriate to force  
existing clients to subsidize new ones.

To bring back the comparison to the graphic design profession (which  
I feel is definitely relevant even though of course we are  
interaction designers) I actually just had a first-hand experience of  
value-based consulting. I recently hired a graphic designer to  
develop my new firm's corporate identity. This graphic design  
professional presented a proposal for two pieces of work, and when I  
balked at the price, he took one part away and reduced the price  
accordingly. There was no discussion of working on a per diem basis,  
or reducing his fees without taking away commensurate value. In  
sticking to his guns, he earned my profound respect as a true  
professional who wouldn't budge on the fundamental value of his work.

Cheers,
Liz


On Jul 6, 2007, at 9:43 AM, Tori Egherman wrote:

> When I was younger, I painted houses. As I got more experienced, I got
> better and faster at my work. I also earned more an hour than a
> beginning painter. The first time I fired someone was when I did the
> math and found that the inexpensive painter I had hired was so slow
> that he was costing more an hour than I was. This was true even
> though I was paid twice as much. It's so easy to make this equation
> in painting or production work. Why do we find it so difficult in our
> own work to make the same argument?
>
> I always have questioned why, when an hourly rate is charged, I get
> paid less as I get better at my work. Anyone have an answer to this?
>