MRM
Geotechnical
- Jun 13, 2002
- 345
I've recently read a book called, "Getting Started in Consulting," by Alan Weiss, PhD. It was interesting to read and he seemed to make a lot of sense on many things.
In particular for the purposes of my question today, Dr. Weiss believes in billing strictly according to value (for the intended outcome) rather than ever using an hourly rate.
That line of thinking made a lot of sense to me at first, but then I thought about it and examined the following; Dr. Weiss's consulting areas include mainly working for very large corporations, helping them improve efficiency and profit. For example, a fee of $50,000, Dr. Weiss can go in and improve operations in a variety of ways which may improve the profits of a company by $5,000,000 per year. A very real value added to the bottom line of the company. Also this would be relatively easy to measure for the company so they would actually see the benefit to the services provided by Dr. Weiss.
My question for you is this; does it sound to you that this type of fee origination (according to value added) would apply to the engineering end of consulting? To me right now, it doesn't seem to because 1) in many instances, the value added to a civil eng project, for example, are not easy to measure, even if the civil engineer is the finest available for the project, 2) Because the value added isn't clear, it seems that engineers would need to continue billing using an hourly rate, and 3) engineering is considered by many out there (sadly) to be a commodity rather than a professional service so it’s difficult to bill much more than the going rate for similar services provided by others.
So in what instances can fees used in engineering be based on value rather than going hourly rates? Does anyone have any success stories in convincing a client that the value that YOU will add to a project is worth more than the rate they would be paying to a competitor of yours to accomplish similar tasks?
In particular for the purposes of my question today, Dr. Weiss believes in billing strictly according to value (for the intended outcome) rather than ever using an hourly rate.
That line of thinking made a lot of sense to me at first, but then I thought about it and examined the following; Dr. Weiss's consulting areas include mainly working for very large corporations, helping them improve efficiency and profit. For example, a fee of $50,000, Dr. Weiss can go in and improve operations in a variety of ways which may improve the profits of a company by $5,000,000 per year. A very real value added to the bottom line of the company. Also this would be relatively easy to measure for the company so they would actually see the benefit to the services provided by Dr. Weiss.
My question for you is this; does it sound to you that this type of fee origination (according to value added) would apply to the engineering end of consulting? To me right now, it doesn't seem to because 1) in many instances, the value added to a civil eng project, for example, are not easy to measure, even if the civil engineer is the finest available for the project, 2) Because the value added isn't clear, it seems that engineers would need to continue billing using an hourly rate, and 3) engineering is considered by many out there (sadly) to be a commodity rather than a professional service so it’s difficult to bill much more than the going rate for similar services provided by others.
So in what instances can fees used in engineering be based on value rather than going hourly rates? Does anyone have any success stories in convincing a client that the value that YOU will add to a project is worth more than the rate they would be paying to a competitor of yours to accomplish similar tasks?