This snippet from Staffing Software Talk gives one of the most powerful reasons I can think of for moving away from the tyranny of the timesheet. Although the context is entirely different, the principle is the same. I’ve highlighted the crucial point:
But the assumption that a higher hourly rate was the best path to increased profit was wrong. The problem with an hourly rate is that you have to work that hour to get that rate. You have no leverage. And as my bill rate went up, I ended up competing with the cream of the airline software talent worldwide. Sure, you could hire consultants and bill them out as well but my forte was operating systems not management.
When I eliminated that hourly rate assumption and went tabula-rasa, the path became clear. I could get that leverage by creating a software package and licensing it to many airlines.
Tags: valuepricing
