24 June 2012 Jay Shepherd

How to price mediocrity

I know this lawyer. Let’s call him “Bob,” because, quite frankly, palindromes are fun (and “Stunt Nuts” doesn’t work as well). He’s not the best lawyer in the world; he’s not the worst. In fact, he’s far from either extreme. He’s right there in the middle.

He’s mediocre. When it comes to mediocrity, he’s the best. I’m not being judgmental here; he’s fine. As in when you go to a restaurant and your steak is overdone and your fries are underdone but you don’t want to sound high maintenance so when the waitress asks how your meal was, you say, “Fine.” That kind of fine.

Now because the work that Bob does is mediocre, the very best way for him to price it is by billing his time on an hourly basis.

You see, there is nothing fundamentally wrong with doing mediocre work. It’s incredibly common. In any profession or industry, if you were to draw a bell curve to show the normal distribution of quality, you would see that most performers end up in the middle. Only a few would be truly poor performers, and only a few excel.

And not every customer needs excellent performance. Sometimes, people just want to get the job done adequately, and they don’t want to pay for a higher level of quality when they don’t need to. So I mean it when I say that I’m not criticizing people who choose to do mediocre work. There is certainly a market for it. There are plenty of times when I have chosen not to pay more to get higher quality. If I’m hiring a lawyer to do a basic real-estate closing, for example, I don’t need David Boies to handle that for me.

Because Bob does mediocre work, there’s no need to differentiate the work that he does. The clients who come to him for that level of service all expect roughly the same from him.

For that reason, when all the work and all the clients are essentially equal, then the best way for Bob to price his work is by merely measuring the time spent and multiplying it by his standard hourly rate (which is, unsurprisingly, average for his market). In other words, Bob is effectively “weighing” time on a scale, rather than assessing the value and quality of the work. When a consumer is buying a commodity like sugar, it makes no sense to do sophisticated lab analysis of each individual crystal. Just weigh it. Five pounds of sugar? That will be five dollars, please.

So if Bob is content doing mediocre work for customers who aren’t looking for more, then by all means he should bill his hours. It’s the most efficient way to track his work when all of it is essentially the same. It’s only when work is differentiated — based on the types of customers and the value that they place on the results — that it makes sense to price.

As I said, Bob is fine (as a pseudonymous, palindromic, mediocre lawyer). If you’re a professional and you want to be like Bob, keep billing your hours. But if you’re not interested in being mediocre (or if you suffer from aibohphobia), then it’s time to learn how to price.

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