My client (his construction company built factories) walked into the conference room where I was writing a keynote for him and tossed a folder on the table.
"We're bidding on a small job," he said, "and our proposal sucks."
I reached for the pages. My first thought was that $525,000 didn't seem like a "small" job to me. My second thought was yeah, it sucked.
"Want me to take a shot at it?" I said. "All the numbers are here. Maybe I can tune it up a little."
An hour later I went to his office. He was on the phone, so I put the revised proposal on the corner of his desk. He nodded, and I went back to the conference room.
Twenty minutes later he put a check for $5,000 beside my laptop with "[ACME] proposal" on the memo line.
I looked up, surprised. "Hold on," I said. "That's way too much. It only took me an hour."
"I don't care how long it took," he said. "I care about value. Not time. And that," he said, pointing to the check, "is how much a great proposal is worth to me."
The Locksmith's Paradox
The difference between time and outcomes is often called the Locksmith's Paradox. (I like to call it the Picasso Paradox; more on that in a second.)
Say an inexperienced locksmith fixes a lock in about an hour. The price is $100, and the customer is happy.
Over the next few years, the locksmith gains considerable skill and experience. When the same customer needs him to make the same type of repair, he finishes the job in about fifteen minutes.
Great -- except when he hands the customer a bill for $100. The job didn't take very long. And the locksmith made it look easy. How could it be worth $100?
That's the Locksmith's Paradox: Same outcome -- but because of the shorter time involved, the customer perceives the value much differently.
As for the Picasso Paradox?
The Picasso Paradox
As legend has it, one day Picasso was at the market. A woman recognized him, and asked him to draw something on a napkin for her. He did, and when he handed it to her said, "That will be 1 million dollars."
"But Mr. Picasso," she said, "it only took you thirty seconds to draw it."
"No," Picasso said. "It took me forty years to be able to do that."
(A similar story involves the artist James McNeill Whistler. Whistler was asked by a lawyer how he could charge so much for a painting that only took two days. "Oh, two days! The labor of two days, then, is that for which you ask two hundred guineas!" Whistler replied, "No. I ask it for a lifetime of knowledge.")
The Picasso Paradox isn't unique to artists, or locksmiths. The Picasso Paradox applies everywhere.
- Like when managers evaluate their employees by hours worked rather than results. Employees who come in early and stay late aren't necessarily more productive; we've all known people who put in long hours but accomplish relatively little.
- Or when business owners decide that the freelancer who quickly solves their software problem can't be worth the price she charges because the fix seemed too "easy."
- Or when the same happens to business owners whose skill and experience allows them to deliver exceptional value relatively quickly, causing customers to question the cost instead of appreciating the value they receive.
Solving the Picasso Paradox
The first problem is easy to solve. Don't focus on the hours your employees work, or where they work from. Butts in seats are irrelevant. Tangible, valuable results are everything. Besides: Constantly worrying about what your employees are -- or are not -- doing is a waste of mental energy you can't afford.
The second problem is also easy to solve: Focus on the value you receive. A warehouse door lock gets fixed in just 15 minutes? Great. That means you're back in action sooner. A coding problem gets fixed in an hour? Great. That means you're up and running sooner. The outcome -- and the speed of the outcome -- is what matters.
Solving the Picasso Paradox your businesses faces is a little tougher. The key is to separate hours from cost.
For example, an estate planning lawyer I know spent considerable time and money developing software that automates much of the process. Now, once he's interviewed a new client, most of the documents involved -- wills, trusts, powers of attorney, etc. -- can be created in just a few hours.
If clients knew that, though... yep: Picasso Paradox. So he charges a fixed fee. Clients are happy because they feel the results are worth the cost. Besides: How long it took is irrelevant, especially since he invested in automation that greatly speeds the process.
What matters is the value of the outcome.
Whenever you can, separate time from your service pricing and charge based on deliverables. Focus on the value the customer receives, not how long it took to create that value.
The fact your can do more, and do it better, in less time -- because of your hard-earned expertise, experience, intuition, etc. -- shouldn't result in you getting paid less. In many cases, a faster outcome is worth more, especially if deliverable speed is important to your customers.
That's why I like to call it the Picasso Paradox: Because when you're really good at what you do... an hour of your time may actually be worth more than ten hours of someone else's. Make sure you find ways to capture that value.
Because you're worth it.