Pay for performance is working based on predetermined results.

Value based billing is for “that great idea you got in shower that is worth something, but only took you 5 minutes to come up with”. You wouldn’t bill for 5 minutes…so you bill to the value.

I agree it can be hard to come up with a number, but thanks for the good comment to get us going on it.

Welcome to episode #41 of Six Pixels Of Separation - The Twist Image Podcast. There are tons of comments (both audio and email) with lots of new conversations and trackbacks to value-based billing. There are some news voices along with……

There’s a famous story about how a woman persuaded Picasso to make a sketch for her on a restaurant napkin. He asked $10,000 for it. She said “But it took you five minutes.” He responded, “No, madam, it took me fifty years.”

Jeffrey Fox talks about “dollarization”: working with prospects to find out what the solution you’re providing to their problems is worth to them. To my mind, this amounts to “How much is it costing you *not* to do this?” It can take some digging to be able to get to a number, depending on the kind of service you have, but somewhere in there you’ll be able to find out, e.g., how many potential sales they’re passing up by not marketing online, and then you charge them a decent percentage of that amount.

This is easier said than done, of course, but if you can make a case for the value of your work to the company, *before* you do it, you might well come out better than if you charge by the hour.