It’s hard to make a large margin selling products now. There are many reasons why, but one of the most important ones is that customers have such easy access to pricing information – they can (and will) comparison shop for the best possible price.
A lot of service organizations go about selling services much like the sell their products – that is, on a “per-unit”, basis – either time and materials, or on an estimated number of hours.
Selling services this way may seem like a smart thing to do – after all, you are giving the customer an accurate quote, you aren’t “hiding” anything, you are keeping prices down, and you are eliminating risk – right?
Theoretically that is true, however in reality most projects run far over initial budget – remember Murphy’s Law always applies.
When projects run over budget, you have two choices – charge the customer for the extra time (they won’t be pleased), or eat the cost (YOU won’t be pleased).
There is a better way.
In this post I’m going to outline four key reasons why selling hourly engagements is the equivalent of flushing money down the toilet.