Watching the time go by

When I talk to other lawyers about value pricing, one of the most common objections I hear goes something like this:

"But if I don't know how long something takes, how am I going to know how much it's worth? And how is the client going to know? And what happens if we sail off the edge of the earth?"

OK, maybe I'm exaggerating with that last one. But you get the idea. Most lawyers are so brainwashed about billable hours that they fail to understand how valuing and pricing work in the real world. Even though they do it all ... the ... time.

Watch this real-life example ...

Hey, you! Yeah, you in the downtown office of the white-shoe law firm. Look at that fancy watch on your wrist. What is it? A Tag Heuer? A Breitling? Nice. How much did it cost? $1,500? $3,000? Wow.

Now how do you think the jeweler came up with price? Counted up the number of hours that a handful of Swiss horologists spent constructing it, then added in the cost of the titanium and steel and so forth? Please.

For that matter, how did you — the buyer — decide how much the watch was worth? Did you ask the jeweler how many hours the aforementioned Swiss spent at the watch factory? Of course not.

The price was set by the jeweler based on his or her estimate of what a successful lawyer like you would be willing to pay for the wristborne status symbol that would show the world what a successful lawyer you are. It's a guess, based on past experience of what other successful lawyers have paid before.

And then you decided whether that price was less than or equal to the value you placed on the watch — what it was worth to you at that time in that place. How much you wanted it or needed it. If the price was too high, you didn't buy it. If enough people don't buy it at that price, the jeweler responds by lowering the price (or by improving his or her marketing).

It's that simple.

So use your fancy watch for something worthwhile, and not for keeping track of your billable hours. Your clients don't value your hours. They value the service you provide. The same way you value your Breitling.