Is efficiency valuable for chargeable work?

Here's a controversial thought: improving the efficiency of chargeable work is a waste of time. 🙂.

Consider this thread:

• Your customers pay you by the hour, not by the deliverable.

• Working more efficiently means that the job gets done faster.

• Working faster means a lower percentage of chargeable time, because travel between jobs takes the same duration.

• A lower percentage of chargeable time means a higher standard cost

• Overall profitability may actually decrease

Of course, this is a narrow view. Customers' pet hate when it comes to time-and-materials work is a supplier who takes longer than necessary. There are also ethical considerations, customer service expectations, and competitive pressures.

Still, there's a key commercial question: how can on-site productivity be improved without sacrificing profitability?

Here are some suggestions:

• Fixed-price quotes. If you're more productive than your competitors, you have an edge. Fixed quotes should carry higher average margins due to the risk transfer from the customer to you if the effort exceeds the estimates. You can share your productivity gains with the customer by offering a competitive price while earning more profit.

• Well-designed call-out charges. This is an upfront premium to cover the cost of booking a technician and their travel time and is correspondingly higher than the standard hourly rate. Improving on-site efficiency means more work is covered by the premium call-out rate instead of regular hourly billing.

• Premium service. The biggest concern for customers is slow work. If you're genuinely more efficient, you can justify a higher hourly rate while still delivering value.

• Higher percentage of chargeable time. Certain things in life go together. For example, pineapple and pizza, and beer and BBQs. The same is true for high productivity and high quality. As well as low customer satisfaction, poor quality means high rework and is often non-chargeable. Increasing productivity through better quality increases the proportion of chargeable time, leading to lower costs and higher profits.

So beyond the ethics and customer satisfaction arguments, there are clear commercial incentives to improve productivity, even in chargeable operations.

As with any business investment, the key is being strategic about productivity enhancements to ensure you reap the commercial rewards.