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How to Bill 25 Hours a Day. . .(And Why You Shouldn’t)

July 10, 2013

Rodney, I’ve got a question about your hours.

Sure, what’s up?

Well, on March 17 you’ve billed us for 25 hours.

Yeah, we were working on that Network Diagram paper. It took a lot longer than we thought it would.

But, there were only 24 hours on March 17.

I was working as a WordPerfect Office email consultant. Our customer, Rick was the administrator for ASP, a company that was upgrading to the latest version of Office. We were designing the upgrade and writing training material for their 500 employees. We were also planning to teach classes for all of their employees.

The “we” was my wife Annie and me. I had been a member of WordPerfect’s SWAT support team. Annie had been a Senior Operator in the WordPerfect Office team when we both left to move to Redmond where I was planning to take a job with Microsoft. We had recently formed Purple Crayon Club Consulting.

20130710-001409.jpgNo one ever noticed my business card didn’t actual have a purple crayon on it.

ASP was our first consulting customer and we almost screwed it up before we even got started.

Well, I put in 13 hours on the 17th and Annie put in 12 hours. It does sorta look weird, but we were both working on it.

Oh. I guess that makes sense. It’s just not what I was expecting.

I could tell that Rick wasn’t satisfied with our explanation. Over lunch Annie and I talked about Rick’s concern and how we should best address it. We met with Rick as soon as we got back into the office.

Rick, it seems like you’re still uncomfortable with the billing for the 17th. We want to make sure that ASP is completely satisfied. Can you help us understand what your concern is?

Well, we’re paying your firm $120 / hour. It doesn’t seem like it should matter how many people you use to meet the needs. I assumed we hired your “firm” at a particular rate.

Okay, we talked about it over lunch and I think we’ve come up with a possible solution. As you know, we bill through the consulting firm. I don’t want to try to explain this to them. How about on our next bill, we include 12 hours that we’ll put on your invoice, but we won’t report to the consulting firm, so you don’t get billed for it. Will that correct this misunderstanding?

That sounds great. I’m sure our corporate controller will go for that.

Rick was clearly relieved and our worries about ASP canceling the contract were also relieved. I’ve often thought about that meeting. In hindsight, I think our original billing was right. At times we were both working on separate pieces of the ASP contract. By compromising we had essentially just agreed that Annie’s time was free. And our share of the billing was $80/hour. So, those 12 hours we gave back was nearly a thousand dollars.

But, the more I learn about business, the more convinced I am that we handled it in the very best possible way. The contract was worth over $50,000. So, the amount we gave back was about 2%. Would it make sense to throw away a sure $50K contract for two percent? I don’t think so.

And yesterday I talked about Setting Consulting Rates. Looked at another way instead of earning $80 / hour, we were now earning $40 / hour. Still much more than either of us had made at WordPerfect.

And by turning ASP from an unhappy to a happy customer, we got a fantastic reference account when we got ready to pitch to the next customer.

Overall, it was definitely money well spent.

This week I’m talking about the Consulting Business. At the beginning of the week I described how consulting is like Feasting On Brownies. . .Every Three Weeks. Yesterday, I explained Setting Consulting Rates. Tomorrow I’ll talk about how if you bill $500 / hour you can get just about anyone to listen.

Rodney M. Bliss is a blogger, author and IT consultant. He is still partnered with his lovely wife Annie, although she’s turned in her laptop to instead focus on raising their 13 kids. They live in Pleasant Grove, Utah.

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