Saturday, June 29, 2013

How much would you pay...?

I've been thinking - which is never a good sign because it usually means things are getting desperate - that there has to be a different (and maybe even better) way of doing things.

Recently, Brian Willingham wrote a piece over in Pursuit Magazine titled 'A Slave to the Billable Hour' and it has rekindled an idea I had a while ago.

Value-based billing.

And by 'value-based', I mean a dollar value that the Client sets for their case. In essence, how much it is worth to them.

Theoretically (and practically) this will result in cases that might otherwise be similar in most respects having wildly different potential payoffs as the Clients place differing values on achieving the outcomes. 

I'm still figuring out how this might work in practice.

Potential client wants someone traced, for example. When they ask how much it is likely to cost (which is always difficult to answer given the variables and unknowns) instead I will counter by asking "well, what is it worth to you for me to find him?"

Now the first problem is defining a successful outcome. Not so much in locating someone as either you've found them or you haven't - but there are other nebulous circumstances such as whether someone is having an affair, or not. You might surveil someone for a given length of time in which they never set a foot wrong but all that proves is that in the time you surveilled them, they never had an affair. Is that a success?  Same with many other types of files such as workplace theft and the like.

So perhaps there has to be two price points.

  1. How much is it worth to you for me to achieve the outcome you seek?
  2. How much is it worth for me to try but not get the desired outcome?
In many cases there are costs involved in conducting an investigation. Fees, disbursements, bribes etc. It isn't necessarily just my time. So while I can zero-rate my time (ie no billable hours) I still have to pay the expenses incurred. And since I'm not prepared to actually lose money conducting an investigation (what is the sense in that?) I'll need to ensure that there is at least some kind of minimum payoff.

Now comes the interesting part.

If a client sets the value of a task rather low, it sends the message that they are not all that invested in the outcome and it really isn't worth a lot to them. It also clearly isn't worth a lot to me, even if I succeed, so I am unlikely to spend a great deal of time on the matter trying to achieve the desired outcome, and I am less likely to undertake enquiries that would incur expenditure on my part unless I could expect to be at least reimbursed if unsuccessful.

And there are going to be other factors in play to determine value.

Client A wants to find Jim who owes him $1000. Client B wants to find Jim who owes him $100,000. Surely then Client B will place a higher value on locating Jim than Client A, even though the expenditure in time and resources would otherwise have been identical?

That's the theory anyway.

Well, I'm going to put the theory to the test.

Apart from the work I currently undertake for existing clients (which is mostly on a subcontractor basis anyway), I am going to do away with time-based billing for the next few months and leave it completely up to the client.

This should also have an positive effect on would-be time-wasters and tyre-kickers as it sends the message that it's 'time to shit or get off the pot' right at the very beginning of the enquiry and there will be no need for lengthy negotiations or discussions.

I'll let you know how this works out.


  1. Interesting thought, but curious how it comes out in practice. Keep us posted.

  2. I'm interested to see how this works out as well. I'm one of those slaves to the billable hour right now. It sucks some of the fun and life out of the job.