Paying Not to Be First

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Paying Not to Be First

As many of you know by now, I had throat surgery last week…

Nothing too serious, but it’s a still a serious part of the body to be operating on (and, yes, I’m still weaning myself off the air-cast on my leg, it’s been a hell of a few months). So, I did my research and found the biggest, best, fanciest specialist in NYC. And, by the way, just like every other big, bad, best specialist in NYC, he doesn’t take insurance and my insurance doesn’t cover out of network. Translation, I ended up paying many thousands of dollars out of my own pocket for a 1-hour operation.

I shared this with a friend who responded, “man, that’s a nice hourly rate.”

But, here’s the thing. The reason I was happy to pay every cent of it was because I wasn’t paying for his “time in the O.R.” I was paying to be as far as possible away from the guy who went first. I was paying for his 25 years perfecting his skills, thousands of patients, tens of thousands of hours and tons of newbie mistakes avoided.

I was, quite simply, paying not to be first.

And, there’s a lesson in that. It applies to pretty much every solo practice Career Renegade. All too often, people are tempted to charge an “hourly” rate for their services, because that’s what the rest of the market does.

I never charge an hourly rate.

Every once in a while, though, someone tries to reverse engineer it out of my project fees or retainer and remarks about what it breaks down to on an hourly basis. But, just like my super-hero doc, you’re not paying me for my time talking, writing or strategizing. That’s only a piece of the puzzle.

Let’s say I charge $10,000 to write a sales letter. Maybe it takes me anywhere from 5 to 25 hours to write. Any way you slice it, that’s a lot of money if you base it purely on “writing time.”

But, you’re not paying for the time it takes me to write it.

You’re paying for the thousands of hours I’ve spent studying the top copywriters, working with them, diving deep into the psychology and linguistics of persuasion. You’re paying to be as far away from the inevitable early disasters as possible. You’re paying the value of the revenue generating asset I am creating for your business. But, most of all…

You’re paying not to be first.

And, at least when I’m the client, the customer…or the patient, I’m going to pay to be as far away from first as my bank account can get me.

As always, just thinking out loud. What do you think?

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32 responses

32 Responses to “Paying Not to Be First”

  1. Interesting idea – and by inference it means that new businesses are better off charging less because people who can’t afford the “not-first” types will go to the new businesses and the new businesses will have people to sort of experiment on until they hit their sweet spot and rock the world with their now highly valuable services – it’s a win for everyone.

    Everything is a trade off of quality, time, expense…

  2. Joe Hughes says:

    That’s a great way to look at a situation, especially when someone is taking a knife to your body. There are so many times when you have to look deeper than the price or cost per hour, or cost per whatever. It’s more about value.

    Similar to your situation…In the marine industry where I work, you never want to contract with a brand new shipyard to build you a vessel. You never want to be their “Hull #1″. You’d rather pay more to be a shipyard’s 4,000th vessel and know that you’re paying for their experience with the previous 3,999 vessels.

  3. Kate says:

    Makes sense when you put it like that. Like when companies proudly display Est. 1901 or “over 25 years experience selling widgets” on their letter heading, they’re telling you how “not first” you are.

  4. Allan Bacon says:

    What a great way to think about how valuable your experience is:

    “You are paying not to have to go through what I went through”

  5. Seonaid says:

    This reminds me of the court case between Whistler and Ruskin. Ruskin thought that 200 guineas was too much for a painting. See Whistler’s answer to the lawyers questions:

    Holker: Did it take you much time to paint the Nocturne in Black and Gold? How soon did you knock it off?
    Whistler: Oh, I ‘knock one off’ possibly in a couple of days – one day to do the work and another to finish it…
    Holker: The labour of two days is that for which you ask two hundred guineas?
    Whistler: No, I ask it for the knowledge I have gained in the work of a lifetime.

    (from Wikipedia:http://en.wikipedia.org/wiki/James_Abbott_McNeill_Whistler)

  6. Andy Hayes says:

    I have a lot of clients that I’d like to show a copy of this. :-)

    Spot on as usual Jonathan.

  7. The same perception problem can occur with most mass produced products. The spread between cost vs retail is often massive, yet still an amazing value.

  8. Jeremy LeRay says:

    Everyone seems to always focus on the billable hours. We have had a lot of billable hours long before we start a project – we just can’t bill for them at that time. Spot on post.

    Who wants to be first?

  9. Interesting post. The problem is this ‘pricing strategy’ puts a lot of beginners at disadvantage. So, if you charge $10,000 to write a sales letter, what should someone who has only 1-2 years of expirience charge? What is he’s as good of a writer as you are?

  10. Christy says:

    Wow. I *so* needed to hear this. Right now. I’ve moved from project-based pricing to hourly rates, and what a mistake!

    And, yes, whatever you charge, you have to remember that it’s the years of experience that make you much quicker and better, negating the whole hourly rate thing.

    Thank you!!

  11. Denise says:

    Well as someone who has worked 27 years in healthcare – you are very wise to pay for not being first!

  12. Jonathan Fields says:

    Great comments as always, everyone. The more you can charge based on value and not time, the better a position you’ll be in,

    @ Seonaid – love that story, thanks for sharing it!

    @ Tatiana – You’re right, this does put newbies at a disadvantage…but fairly so. If you learning and growing on someone else’s dime, your fees should reflect that. Gotta to earn your stripes like everyone else and prove value over time. BUT, you can accelerate the move to value by pouring yourself more aggressively into learning, doing more projects and, strongly advised, finding a way to be mentored or study with the top people in your field.

  13. Hi Jonathan, this is a great point, especially for those of us trying to make it on our own and need to establish pricing. I am more than willing to pay extra to ensure I am getting the quality I want, and I think this is a good thing to reverse engineer and apply to the quality we offer ourselves and what we charge for it.

    Good luck with your recovery!

  14. Jonathon, I sometimes fight this same question when I charge for services what some consider too high. I remind myself and potential clients that they are paying for my expertise not just the products or services they receive. They are paying for the value..of not being first.

    Well said!
    Kris

  15. Hi Jonathan:

    Great point. Health is not an area where you want to take any chances. As a sign on my accountant’s office wall says: $50/hour: $5 for doing, $45 for knowing what to do (based on the rates I’m paying, that must be a pretty old sign, but that’s another story, and doesn’t change the message one bit). Hope you’re feeling better.

  16. It’s amazing how decidedly un-frugal we get when something is important to us. I have been known to nitpick about silly low cost things, but when faced with the need for fast, reliable help with my computer – I was willing to shell out $100 an hour for speedy virtual coaching through my problem.

    I may have found someone cheaper – but I wanted to know that the person I worked with REALLY knew his way around my system.

    And I wasn’t disappointed!

  17. [...] Ever wondered why there’s a whole market of clients out there willing to pay top dollar despite the horde of professionals offering dirt-cheap prices? Jonathan Fields knows why — find out for yourself in Paying Not to Be First. [...]

  18. SO true!! A lesson I just recently learned!

    I just started to freelance full time and a friend pointed out that by doing all my project quotes by the hour, I’m de-valuating myself.

    If I’m an expert at what I do, and it takes me half the time of someone that isn’t an expert, why should I get paid less than them?

  19. [...] Ever wondered why there’s a whole market of clients out there willing to pay top dollar despite the horde of professionals offering dirt-cheap prices? Jonathan Fields knows why — find out for yourself in Paying Not to Be First. [...]

  20. Anne says:

    This is a great article – you’ve expressed how I’ve felt about the design industry. I charge my clients what I’m worth – I have never bid a lower price on a project just to win a client, and I never will! And yes, I’ve been solidly busy with work – it pays to be confident in your ability, and then to put your money where your mouth is.

  21. Niklas B says:

    Great post! It’s worth mentioning however, that having a fixed price project makes it extremely important to have written clear and precise guidelines for the projects. Make sure the client (and you) knows what the project consists of, and make the client sign that paper. Otherwise he might return and ask your to “fix” or “add” something he feel he needs but that isn’t in the specifications.

    Of course when I think about it, that applies to app projects. But somethings (specially in stressful projects) it’s overlooked. Agree on a specification and if the clients wants to change it mid-project you can simply state that the function the clients wishes to have is not included in the specifications, but of course you could work out a solution. The solution might be more money, more time or something else. That way you have a clear view of the project, but the client doesn’t feel as he is locked down in a project.

  22. [...] Ever wondered why there’s a whole market of clients out there willing to pay top dollar despite the horde of professionals offering dirt-cheap prices? Jonathan Fields knows why — find out for yourself in Paying Not to Be First. [...]

  23. I am grateful to Mike Tekula for sharing this post at Twitter where I saw it and reshared it at Twitter, FriendFeed and cliKball. There is bound to be a post in my blog in the future that includes a link here.

    So many people fail to realize that they get what they pay for and that cost must be determined by the quality of the deliverable – what you actually get for what you paid. Experience will enhance that quality but simply doing something for many years does NOT equate to being capable of brilliant work!

    While you paid not to be first, some commentators seem to miss the point that you intentionally chose the specialist you determined to be best – not simply the one who had been doing this the longest. Yes, that could be the same person but it might not be.

    Some strive to be the very best at what they do and continually hone their skills. THEY are the ones you want to hire. Most simply do what they do and their work will not be nearly as good – regardless of the number of years they have been working at it.

  24. Tess says:

    This is absolutely true. With one caveat: there’s a difference between 20 years’ experience and one year’s experience repeated 20 times. In other words those who approach their craft with imagination, experimentation and dedication AND link that to years of experience are those who define their own work and become the “go to” people. Like your surgeon.

    Hope you’re feeling OK, by the way.

  25. Dianna says:

    An excellent post – again!

    It is sometimes tough to get clients and potential clients to understand just what it is they are paying for when the product being sold is not a “widget”, but a service. There is a fear among prospects that since they are purchasing something they cannot touch and about which they are less informed, that they might get hoodwinked. I certainly understand this having dealt with service contractors of one sort or another on several occasions.

    However, at some point it has to become about more than the hours. If you just want a low hourly rate, you will certainly be able to fine it. However, if you want the benefit of years of knowledge and expertise, and people who will become part of your company’s team, to help you reach your stated (and sometimes unstated) goals, then you have to consider more than the $/hr equation.

    With some prospects, this is a tough sell. Others, however, get it instantly and those projects are always the most rewarding for both parties.

    Thanks for giving us some new phrasing ideas, and for continuing to make us all think and keep ourselves honest about what we are doing and how we are positioning ourselves. I thank you even more for doing so at no charge. Very generous.

    Happy healing and all the best to you!

  26. Steve says:

    I have experienced the pain of the client who reverse engineers hourly rates. And I agree totally with this post.

    However, it begs the question: What is a good approach for figuring out how much you are actually worth?

  27. [...] a recent post in his Career Renegade blog, Jonathan commented on his recent throat surgery. He ended up going with a top-notch (and [...]

  28. [...] his blog post, Paying Not To Be First, Jonathan Fields discusses why paying more for a service is [...]

  29. cbAnthony says:

    Good post. I think this is an important topic for all job seekers to think about when they’re deciding how to negotiate salaries. If they can think of their experience and work history as money earned, they won’t feel as awkward not accepting the first offer from an employer.
    .-= cbAnthony´s last blog ..Tuesday’s good reads roundup =-.

  30. secret agent girl says:

    The concept is not news, the reasoning is not unflawed, and most experts are not really worth what they charge.

  31. Alan Allard says:

    The level of fees we charge reflect the level of our self-esteem/confidence and our business and marketing acumen. Alan Weiss, a global consultant has a great book on this topic, Value Based Fees.

  32. [...] and personal growth as on output. Jonathan Fields has a great article about why his clients pay not to be first. He can earn $10,000 for a few hours of work, not because his time is worth that much, but because [...]