What is an hour worth?
People often ask me what the hourly rate of their profession is. And often I know the answer to that because as a publisher of the Prices & Tariff Guide long research on doe. But usually I ask the questioner a counter question: 'what does a bottle of water cost?
The price of a bottle of water in the supermarket is about 30 cents. If you fill your bottle yourself, you are ready for less than a cent. And the most expensive water for sale is called Kone Ngari and you can buy it converted for $ 402 a bottle!
Still, I'm sure people who have been thirsting and crawling in the desert for three days want to pay a lot more for a bottle of supermarket water. The value of water depends on several factors. For example, location, is it easily available or not, are there other providers of water, how much does the customer need it?
Cost and value have very little to do with each other. Just think of watches, for 5 euros you can buy a good watch, yet there are companies that sell watches for thousands of euros. You can buy a car to drive from A to B for a new price for 10.000 euros. Yet there are people who are happy to pay fifty times as much for a car. And some collectors spent millions on a car.
The same goes for hourly rates. These are partly determined by the market. But not only that. Your customer is not necessarily concerned with what you cost, but mainly with what your service or product is of value to him or her. The trick is to find out what your customer values.
And how should that be?
The answer is not difficult, although it can be difficult in practice: you ask the customer. When you make an offer, it should no longer be a secret to you what your customer exactly wants. This way you change price in value.
Peter Bosman
Publisher ZZP Guide and Prices & Tariff Guide