Spending scandals are always good news stories; the best, of course, involve taxpayer dollars. There seem to have been a lot of them lately. One such story this week, involves the RCMP planning to spend $200K on the leadership development of three of its officers. Interestingly, perhaps, the issue this twigged with me is “what do you charge for these type of services?”

I recently had a conversation with a former professor and colleague of mine a Schulich Business School, and we agreed that one of the biggest challenges for providers of professional services (like me!) is pricing. The formula involves trading time for money: hours or days spent either with the client or in preparation. Time spent on the latter has more latitude because, as my client, you won’t know exactly how much time I have spent preparing. I will suggest that in most cases there is a reasonable range, which is usually driven by the size of the project and the available budget. The resulting agreement ensures that you, as my client, get value for money and that I, as the provider, receive compensation that allows me to stay in business with a manageable schedule (e.g. not working 90 hours a week, 51.5 weeks a year).

A recurring stat in my profession is that employers spend on average $1200 per year per employee on training and development. Some will receive a much higher investment in their skills and abilities, and those are the ones that most providers like me hope to train. I am not sure of the upper limit of the reasonable range for an individual’s training allowance, but I think it is considerably south of “$200K for three people.”

What happens when the buyer fails to enact the “reasonable range”? The current levels of scrutiny on such spending, as well as the strong trends toward forced transparency, may eliminate these situations completely. Until that happens, individual ethics will dictate how much time makes into onto the invoice. Let’s call this “micro governance.” I think that it can cover for any governance/oversight that may be lacking in the always imperfect systems. Ethics or no ethics, for the sustainability of both sides, the reasonable range is the safest place to be. I hope we can continue to find it.

Tagged as: Malandro Communications, micro governance, pricing, professional services, RCMP, Sustainability

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