Oh yes, my dear fellow entrepreneurs, business owners, and anyone who's ever tried to launch something beyond themselves into a well-deserved vacation! You know that nagging, persistent feeling, don't you? It's like an invisible tick under your skin. I often get asked the same question: "What's your hourly rate?"
Good heavens! You, my valuable clients, are accustomed to valuing work as if you're buying potatoes at the market: by the pound, or in this case, by the hour. But allow me to ask: what genius decided to sell a Beethoven symphony by the number of times the conductor taps their baton? Or a Rembrandt painting by the hours spent mixing paints? Absurd, isn't it? Exactly! So believe me when I say: this isn't just a question; it's a death sentence. A death sentence for your dreams of prosperity, your plans for market dominance, your future. While you're counting billable hours, your competitors are already launching rockets into space, and your clients... well, they're just waiting for you to finally wake up!
While "billable hours" can be an indispensable tool for internal accounting within large corporations, for successful client interaction and effective marketing, it's far better to use clear, understandable service prices expressed in monetary units. This fosters better mutual understanding and simplifies the decision-making process for the client.
By the way, it's important to understand that from a financial perspective, engineering solutions often qualify as Intangible Assets (IAs). This means their value doesn't just "evaporate" once the work is done; it continues to provide benefit and depreciates over time, much like an asset, which completely contradicts the concept of hourly billing.
(Note: The detailed accounting lines like "debit accounts 20, 25, 26, 44 and credit account 05" are highly specific to Russian accounting standards (FASBU) and would likely be lost on or confuse a general English-speaking business audience. I've opted to simplify this section to focus on the concept of Intangible Assets.)
Solutions vs. Hours: A Clear Distinction
Imagine hiring a plumber. Do you pay them for every hour they spend working, or for the result – for the water flowing from the faucet again and the dripping stopping? Obviously, for the result. It's the same with a design engineer, but on a much more complex and large-scale level. I don't just sit at a computer for a specific number of hours creating drawings. I solve complex business problems that ultimately save money, increase profit, or provide a competitive advantage.
How "Billable Hours" See It: An engineer spends hours on 3D modeling, creating drawings, and performing calculations in CAD/CAE programs. It seems like it's just time spent in front of a computer.
How "Solutions" Deliver Value: An engineer creates a product from scratch that is ready for production. I take a raw idea and transform it into a tangible object that can be manufactured and sold. This isn't just about "drawing"; it's about designing something that will work, withstand loads, meet requirements, and be economically viable to produce. The benefit here isn't in the time spent, but in preventing costly mistakes, accelerating product launch, and ensuring its competitiveness. You don't just receive a set of files; you get the foundation for your new product that will save months and millions in revisions and reworks.
Good grief! At first glance, it seems logical. Many are used to valuing work by the time spent. But as a design engineer, I can confidently say: my work isn't just about hours; it's about solutions. That's precisely why I don't sell billable hours. Instead, I offer a comprehensive approach that considers the unique needs of each client.
Why "Billable Hours" Fail to Reflect My Value
Calculating engineering service costs based on billable hours often leads to an undervaluation of the true worth I bring to my clients. Engineering solutions are much more than just the time spent on a task. They represent:
-
Expertise and Experience: Behind every project are years of learning, continuous skill refinement, and accumulated experience. My qualifications allow me not just to complete assigned tasks, but to find the most effective, innovative, and economically beneficial solutions.
-
Accountability for Results: I bear full responsibility for the functionality, efficiency, and safety of every implemented solution. My goal isn't just a finished drawing, but a working product that brings real value to your business.
-
Innovation and Customization: Many projects demand unconventional thinking, the development of unique technologies, or the adaptation of existing solutions to the specific conditions of your production. This simply cannot be valued by a simple hourly rate.
-
Risk Management: In mechanical engineering, risks are an inherent part of every project. My job is to anticipate potential problems, minimize their impact, and ensure smooth project execution. Examples of risks I manage include:
- Technical Risks: Equipment failures, material defects, design errors, software glitches.
- Production Risks: Manufacturing delays, shortage of qualified personnel, assembly quality issues.
- Economic Risks: Fluctuations in raw material prices, exchange rate changes, unfavorable market conditions.
- Supply Chain Risks: Delivery delays, quality issues with supplier components, logistical disruptions.
- Project Risks: Incorrect estimation of timelines and budget, unclear requirement definitions, lack of resources.
Overhead Costs: The Invisible Army Working for Your Project
Time is money? Only if you're counting it through a leaky pocket!
You've probably seen those headlines: "Time is Money. How Much Does an Engineer's Hour Cost?" And, of course, these well-meaning authors offer you a simple formula: costs divided by time. Yeah, right. As if life were a first-grade arithmetic problem. Let's try: if an engineer earns ₽100,000 (roughly $1,100 USD) and there are 160 working hours in a month, then, by this "brilliant" logic, their hour costs ₽625 (about $7 USD). Sounds appealing, doesn't it?
But here's the catch: when you get a bill for ₽3,500 (about $38 USD) per hour, you clutch your chest and exclaim: "Does your engineer earn half a million?!" And I understand you. This question has become a meme after one exhibition. No, they don't. And there's no such huge markup either. It's just that you can't plug everyday numbers into that "simple" formula. It's like trying to measure the ocean's depth with a ruler.
Beyond salary and taxes, there's a whole mountain of other expenses that the client doesn't directly see but are essential for operations:
-
Office Rent and Utilities: A comfortable place where I create your "solutions" isn't free. And for light, so I'm not drawing in the dark, and for heat, so I don't turn into an icicle.
-
Equipment and Software: To create something innovative, I need not only my brain but also powerful computers, specialized software, 3D printers, and measuring instruments. Software licenses alone can sometimes cost as much as a small airplane. Did you think I do everything on a napkin? These investments in cutting-edge tools allow me to develop optimal, proven, and highly efficient solutions that are impossible without such equipment, not just spend hours.
-
Training and Development: The world of technology doesn't stand still. To stay at the forefront of progress and offer you the most advanced solutions, I constantly learn, take courses, and participate in conferences. And that also costs money and time.
-
Administrative Expenses: Accountants, lawyers, managers – a whole team of people who ensure our ship doesn't sink in bureaucratic quicksand. Their salaries are also included in the cost.
-
Marketing and Sales: For you to even know I exist and that I can save your business, someone needs to tell you about it. Advertising, exhibitions, presentations – these aren't free either.
-
Profits for Prosperity: And what if I told you that this cost includes not only my labor and current expenses but also my ability to grow? My investments in new technologies, in research, in those unique solutions that will become your competitive advantage tomorrow. If I can't invest in my own development, how can I ensure the prosperity of your business in the future?
So, when you ask about an hourly rate, you're asking me to value not just my work, but also this entire invisible yet crucially important infrastructure that allows me to provide you with ready, working solutions, not just abstract hours.
A Real-Life Story: The Cost of Misunderstanding Value
Oh, what a tale! Let's dive into a story that still leaves me with a mix of frustration and mild astonishment. It was one of those times when you see the solution to a problem literally in your hands, but due to someone else's preconceptions, you have to watch as the situation worsens, causing colossal damage.
The Broken Line and the Ticking Loss Counter
The incident occurred at a large enterprise where, one morning, disaster struck – a single part broke, and the entire production line came to a halt. Imagine: the entire technological process paralyzed, and with it, enormous sums of money, flowing through their fingers. Each day of downtime cost the company a minimum of $3,000. Thousands of dollars simply dissolving into thin air while employees, working reduced hours due to lack of work, just sat and waited.
My Proposal and the "Expensive" Button
As an engineer and entrepreneur, I immediately saw the problem. I had the experience, the knowledge, and the necessary connections. I proposed a clear and, in my opinion, incredibly advantageous solution: I was ready to find a contractor, conduct all measurements, organize the manufacturing, and deliver the required part. For all this, I asked for $1,000, plus, of course, the cost of the part itself. In the context of daily losses of $3,000, this was, to put it mildly, an extremely favorable offer.
But then, a manager stepped onto the scene. His reaction was disconcerting. He refused. Why? "That's more than my monthly salary! You're an engineer, not a manager; why should you earn as much as I do? What's the big deal, you just pressed a button, and you're asking for so much money. That's only two hours of work!"
The Price of Refusal: Lessons in Losses
What a dizzying misstep! "Pressed a button"... That's how dismissively they valued my experience, my connections, my ability to swiftly solve a problem that was daily costing the enterprise thousands of dollars. He didn't understand that behind that "button" stood years of training, thousands of hours of practice, and dozens of successfully resolved tasks.
As a result, the enterprise continued to incur losses. Days of downtime turned into weeks. The part, which could have been manufactured locally, had to be ordered from abroad, and at three times the price. And the delivery times were, to put it mildly, not short.
It still pains me to remember the colossal losses the enterprise suffered due to the narrow-mindedness of one manager. The irony is that the owner, of course, knew nothing about it. He only saw dry figures of losses, unaware that a solution was right under his nose, rejected due to personal ambition and false notions about the value of someone else's labor.
This story is a vivid example of how shortsightedness and the inability to assess the true value of knowledge and experience can lead to far greater financial losses than initially apparent. Have you encountered similar situations where an obvious solution was ignored due to preconceptions?
My Philosophy: Selling Solutions, Not Time
My pricing policy isn't about my hourly rate. It's about the value, the immense benefit that my solutions bring to YOU. I consider not only my brilliant mind and sleepless nights but also the potential savings of your millions, the exponential increase in your production efficiency, the sky-high growth of your competitiveness, and all the other advantages you'll gain when my solution is working for you.
These benefits are achieved through my key competencies, each aimed at creating a concrete, measurable result for your business:
- Full Product Development Cycle: From concept to mass production (including 3D modeling, drafting, and calculations in CAD/CAE programs). This provides you with a ready-to-manufacture and sell product, avoiding costly rework.
- Technical Documentation: Development and adaptation of design and technological documentation to relevant standards (e.g., GOST RB, EAEU equivalents). Ensures compliance and accelerates market launch.
- Certification and Standards: Processing of permits (declarations of conformity, certificates, state registration certificates). Removes the burden of bureaucracy and opens access to new markets.
- R&D Adaptation: Translating experimental developments into mass production, considering manufacturing plant capabilities. Allows you to transform scientific ideas into profitable products.
- Process Optimization: Implementing engineering solutions to reduce production costs, enhance quality, and increase product output speed. Directly leads to increased profit and competitiveness.
- Project Management: Coordinating teams, controlling timelines, budget, and technical requirements. Ensures timely and high-quality project execution without additional costs.
I offer you comprehensive engineering solutions for all imaginable and unimaginable industries. Do you need to:
- Develop and implement something from scratch? From idea to full realization. I'll guide you through all the circles of engineering hell.
- Substitute imports? Find or create domestic alternatives that will work better than the original? I'm your personal "Mazay" rescuing "hares" from the flood of sanctions. (Note: "Mazay" and "hares" are cultural references. I've kept them for flavor but added a brief explanation. You might consider replacing this with a more universally understood metaphor if desired.)
- Automate and digitize? Transform your factory into a high-tech fortress where everything runs like clockwork? I'll show you how to do it without magic, only with precise calculations and a bit of engineering intuition.
Wow! The time you pay for isn't just about hours spent at the CAD "drawing board." It's also hours of deep contemplation of your task, its nuances, and hidden pitfalls. It's time spent reading specialized literature, studying the latest technologies and standards. It's hours when I choose from hundreds of possible options the one that's perfectly suited for you. It's time when I delve into the core of your problem to offer you not just a solution, but an ideal, meticulously crafted, perfectly functioning solution.
My main goal is not just to help you put out the fire of a current problem, but to ensure your long-term, unstoppable growth and success. That's why my services include not only design but also consultations, in-depth analysis, support at all stages of implementation, and even my moral support if something goes wrong. (Just kidding, of course. Nothing will go wrong. Well, almost.)
So, my dear future friend, if you're looking for more than just someone who will sit and spend their hours, but a reliable partner who will help you achieve your strategic goals and bring real, tangible value to your business, then stop asking about billable hours.
Simply ask: "What solution will you propose for my... (insert your most pressing problem here)?"
And I'm ready to offer you something that will perfectly match your goals. Or perhaps even exceed your wildest expectations. Because, unlike those who sell hours, I sell the future. And the future, as you know, is priceless.
So, esteemed leaders and innovators, I ask you a direct question: are you ready to keep measuring value by the hour while your competitors are measuring it in billions? Are you finally ready to look beyond outdated metrics and see the true potential of engineering thought, which doesn't just draw lines but builds the future?
Share this article. Discuss it. Perhaps it will be the spark that ignites the flame of real change in your company. After all, as a smart person once said (perhaps even myself, after another sleepless night): "The most expensive hour is the one you spent looking for a cheap solution." These solutions, based on deep analysis and experience, will be your competitive advantage and the key to long-term success.
P.S. And now, be honest: how many times have you miscalculated by trying to save on what matters most? Don't be shy, we've all been there. But it's time to change that, isn't it? Thank you for sharing your thoughts and experiences – they are truly valuable to me and other readers.
Comments
Post a Comment