As each year backfires into December and the summer break, I have become used to two feelings grating up against each other. On the one hand, excitement at the prospect of a low-demand rest, and on the other hand, the rising anxiety at the cost of a break and no income.

Bear with me, I am tired, its been a long year, and I am overly pensive (and a little grouchy).  That is a warning, so you may want to quit reading now.

In professional services, most of us sell our time. We should probably focus more on a value exchange, but to be frank, most clients always equate a fee to time and keep the value exchange out of the conversation. Its tricky, there have been times where I have been paid for my time in thousands of rand, but have been clearly told a while later that I assisted a business in turning hundreds of thousands to millions of rand in value through my efforts.  It was never about me, but its an interesting proposition to link value to overall impact. And of course, that could swing both ways, no impact, no value, no fee?

Most employed professionals work for 12 months of the year and receive the equivalent of 13 months’ salary (not always, but most bonus and incentive schemes reward professionals in full time employment). In my game, we can earn for about 10 months of the year to cover 12 months of expenses (generally we need decent breaks and some months are littered with school and public holidays and clients just stop booking work). It’s a hard slog.

The end of the year is as much about celebrating as it is about trying to catch up on rest to remain sharp and focused, and to measure and manage a nest egg to cover the quiet months of the year. In truth, I generally suffer from low grade anxiety all year; I hate to admit it, but I actually do.

Don’t get me wrong, the perks of self employment are attractive – flexibility, choice, a sense of meaning and variety, however I do think these characteristics of self employment are far harder to enjoy in reality. And I sometimes feel only people who have sold their time for a living can truly understand this.

So here are a few thoughts if you wish to take the leap into my world, or indeed if you are engaging with a consultant who sells their value (through time) to your organisation.

Let me share a few experiences.

The first was with a large organisation where the HR function was trying to evolve its culture. It was a vast brief and they wanted guidance and assistance.  They call me in on a referral from a colleague (just setting up the time in my diary takes about 20 minutes of back and forth communications).  It takes me 45-minutes to get to the meeting, I pay for parking, and arrive 15 minutes early (I prefer breathing room before important meetings, but it could also be my pedantic, German blood).  That is 1 hour 20-minutes of my time. We meet for an hour, and I am asked to pull together a proposal. In total the entire engagement to the delivery of the proposal takes me 5 hours (which is unpaid for). The kick in the teeth, was that the organisation did not even bother to respond to my mails or thank me for the proposal. Half a day wasted, and it went nowhere. I would love to say this is once-off, but it happens more often than I can afford. That time is lost, unsold, and unrecoverable. Did the client get value? Yes, I believe they received immense value, but at my expense.

Then there are the late meeting changes, and cancellations. Each of which throw a time-focused diary into disarray, and often lead to more lost hours.  Admin, calls, follow ups, collating notes, continuous professional development, financial tracking and reporting, marketing and networking, all critical and also hours lost in a day, week and month that do not accrue an income.

Often times the biggest drain of time is travel. A session might be an hour-long coaching engagement, but it requires preparation and post session reflection, and travel to and from the client offices. It is quite often the case that a one-hour coaching session, requires up to 2,5 hours of time (sessions booked in town for the early mornings can take up to 4 hours of my time, for a 60-min session).  A 7 hour day of facilitation usually comes with an additional half day of briefings, prep and travel. The maths eventually just doesn’t stack up.

So shouldn’t we be talking about a value transaction, rather than a time equation? I believe we should, but how? I have attempted to offer packages that include the behind the scenes preparation, planning and general logistics and investment of time. They have all been categorically rejected with a clear message of ‘we will just focus on the time you spend with us, don’t worry about those add ons’. For the sake of the relationship, I usually just swallow the add ons for my own pocket.

My metric of comparison is that of a clinical psychologist who has been in practice for at least 15 years. I am first a Clinical Psychologist, but now consult into organisations.  At face value some of my fees look like they are double to three times that of a psychologists hourly fee in private practice, but on a month to month basis, I am always short by at least 25% in comparison. It leaves me wondering and often questioning whether this self-employment thing is truly flexible, free and as ‘lucky’ as we often think. I could be in private practice, waiting for people to come and see me for 6-7 hours per day. I would be unhappy, but its also a sobering comparison.

I wouldn’t change my choice to be an independent professional.  I am not in the job market, and would be challenged in such contexts, but in the spirit of true partnership I believe we should be exploring how to equate professional services to value, and not  only time.

Any ideas? and examples any of you could share to assist?

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9 Comments

  1. Hello Marc, I so totally relate to this article so beautifully written and so on point. You’re not alone doing the maths whether working solo and without huge company overheads is, in fact, a viable business model. I have found that a combination of individual coaching together with group interventions is what works best; at the same time, I feel that you shouldn’t be afraid to charge what you believe you’re worth. Perhaps you should be charging for 2.5 hours at the full rate but not specify the rate in detail – your flat rate per ‘consultation’ is x (inclusive of travel time etc.) and be confident about this rate; take it or leave it. You’ve earned yourself a solid reputation and those that want to use your services will pay.
    Thank you for sharing your thoughts so openly.

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  2. Hi Marc
    Was thinking of you recently. Hope you’re well?
    Kind regards
    David
    David Beattie
    082 417 5366
    david@equiphq.co.za
    Lukhanyo Property/ Chorus Letting/ Seed Community Schemes Management/ PocketLet/ The Expert Landlord
    http://www.linkedin.com/in/davidbeattie1
    [cid:image001.png@01D3B612.CE189360]
    From: Culturesmiths
    Reply-To: Culturesmiths
    Date: Tuesday, 27 November 2018 at 13:57
    To: David Beattie
    Subject: [New post] The Woes of Selling Time
    Marc Rogatschnig posted: “As each year backfires into December and the summer break, I have become used to two feelings grating up against each other. On the one hand, excitement at the prospect of a low-demand rest, and on the other hand, the rising anxiety at the cost of a break”

    Like

  3. Hi Marc, I relate to the paradox of constrained freedom versus wage-slaved liberty you identify here. I have come to consider that no-one is truly self-employed, instead most consultants have, in effect, multiple employers with multiple inefficiencies and frictions to manage. I try to turn this to my advantage by learning as much from each client and applying the knowledge into all my other engagements (obviously with total respect for IP etc). I also find that as I’ve specialised more, my network both gains and gives compounded value into my multiple client relationships. In terms of revenue, I earn about 30% of my income in USD, and for 2019 I want to increase this to 50% – not only because of the currency advantage but because working remotely as I mostly do is highly efficient without the wasted travel time.

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  4. Thank you Marc- I am also a consultant who works for both commission and fees. I appreciate how you have taken the time to express the challenges for those who charge for time.
    What has made a significant difference to my income model is the small accumulating trail fee that pays out on the products sold or investment made. This grows with me as I grow my book and the compounding growth does make a massive difference to what now becomes a basic salary that at least pays the bills and lowers the monthly anxiety about securing new business. As a budding Coach and Consultant in an industry pushing for professionalism and a fee based future, I would think the below may become an option.
    Maybe like when a new exec is on boarded into a firm the firm sometimes pays a bonus for acceptance. So there could be a negotiated Once Off Lump sum based on the contracts length and and over and above the consulting fees that would reward the value delivered for the contract – ( Obviously this can be a minimum and a maximum within budget ext for the company ) There would need to be a few perimeters agreed to and metrics for the rating and then the rating would link to the bonus paid. This money would need to be above the fee and invested into an Annuity! so that in time it creates a surplus interest bearing income. It would need to be named in a way so that all those who operate like this – Im thinking ALL fee based consultants see it as a business model that is imperative for survival and to remain viable and in the long term sustainable, while becoming a culural norm for business’s who employ consulting firms and or consultants.
    I like the Idea Myself…….

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  5. I did it for 17 years Marc so I feel your pain deeply. Apart from employing people to leverage their time (which comes with its own pain), the only way out is to switch models and have the confidence to hold fast. If you are really good, this can work as you tip the power balance with the client to a more equitable one, but if you are actually a commodity you’d better start to enjoy peanut butter sandwiches and water.

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    1. spot on Rob. I have found a growing sense of confidence in the value in myself (which to be frank is difficult to measure in my game) to be a step change equaliser. Staving off the peanut butter sandwiches :). Hope you are thriving as the year comes to an end…

      Like

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