Value is King : Making Big Bucks in IT

    August 7, 2003

Value IS king. That’s what we get paid for. For some strange reason, though, we tend to think that we are getting paid to use technology. If you look at ads for technology service companies, you frequently see a listing of skills. Qualifications. Abilities. As though the mere fact that some random firm possesses IT specialists that are familar with some random technology is going to transport a buyer’s firm to dizzying heights of unforeseen profitability.

On the other hand, desktop computer companies don’t fall prey to this trap. They stress benefits. They stress value. They know their buyer isn’t looking for a motherboard with an onboard soundcard; they know he’s looking for a computer he can play games on, or edit his family picnic pictures, or whatever. They know that they get paid to provide value. They, like all technology companies, are getting paid to accomplish some business goal – to make somebody money – to produce VALUE. V-A-L-U-E. It’s the ONLY thing that anyone gets paid for.

Because it’s all you’ll be paid for, the only thing you should be concerned with is producing value. That’s it. If a technology paradigm, language, or fad doesn’t help your clients, you don’t need to concern yourself with it.

On the other hand, your client doesn’t care what technology you are skilled at. He only cares what value you can give him. Therefore, become a technology atheist. If you need to learn and use a new technology, do it. Don’t be addicted to your favorite technology; for a technology consultant, technologies are just tools in the toolbox.

Further, don’t worry about conventional wisdom, particularly when it comes to business practices. Most people in the technology industry aren’t very good at running their business. They are technology people, not businesspeople. Because they aren’t very good at business, they don’t dispense very good business advice. Because their advice isn’t very good, don’t take it.

For example, most technology people charge hourly rates. This is a terrible idea. The idea that your time is intrinsically worth money is foolish – it isn’t. Only the value you provide is worth money. Even worse, when you charge by time, you do not have any direct fiscal motivation to do good work, or even to work hard. In fact, you have motivation to do the opposite; by stretching out the work, you create more work for yourself. This is puts your best interests in direct opposition to the clients. Clearly, that isn’t a good idea.

It is far better to charge by value. Charge based on how much your client is going to benefit. Hypothetically, if you could spend ten minutes and save your client $100,000 a year, isn’t $20,0000 or $30,000 a reasonable compensation? That’s an obscene sum if your thinking in terms of trading money for time. However, it’s totally reasonable if you think in terms of value. And in the end, you will only be retained if you bring value to your customer. It is far wiser, therefore, to motivate yourself to produce value. The best way to do this is by charging by value.

Projects should be billed by the project, not by the hour, and they should be estimated, again, by value, not by time. Projects should always be worth more by value than by time – if there is ever a project that isn’t, when your time is worth more than the value of the project, then you shouldn’t undertake that project. After all, if the benefit of the project isn’t worth at least as much as the work required, why do it?

Because value is everything, you should charge by value. And at the same time, you should strive to provide as much value to your client as possible. By doing this, you’ll be motivated to provide more value for the client. The more value your provide, naturally, the more you charge, and both you and your clients will benefit.

David Berube is a writer, software developer, and speaker.
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