VeraSage

Richard Skufza

I understand the intent of the slide.  However, I think it would be helpful to show an example.  The Professional Service model is driven by a billable rate.  A fixed fee based upon a defined scope drives the Professional Knowledge Firm.  What’s the difference in rate?  Or, if a client asks what is your billable rate?  The Professional Service Firm would quote $x per hour.  How should the Professional Knowledge Firm respond?

Ron Baker

Richard,

The difference is in a PKF there is no “hourly rate,” only prices, like every other business on the planet. We don’t fly on airlines that price $4/minute. We get a price for everything we buy, before we buy it, period.

Customers don’t care about an “hourly rate,” they want a price. This is why the billable hour is under attack, and by the clients themselves--see the blog post and video right under this one at http://www.verasage.com/index.php/community/
comments/what_do_you_know_we_are_mainstream/

If firms stopped talking about hourly rates, and instead gave customers a price up-front, no customer would ever ask for an hourly rate. There are thousands of firms around the world who do this very thing, all quite successfully, and to the delight of their customers.

That’s why the billable hour and the timesheet must die. It’s not a price--it’s a rate. Customers want prices. Professional firms are subject to the same laws of economics as every other business.

This blog is full of Trailblazers who follow this model.

Hope that helps.