A consultant or any other knowledge worker will inevitably learn while executing projects: on-the-job experience. He will improve his skills with handling the customer and partners and will do some project-related research he can bill the customer for.
However, I’ve recently had the first customer who has actually clearly stated “no learning while earning”. In his opinion, he pays quite a high price for a well known professional service provider because of their knowledge. And understandibly, he won’t pay for us to obtain general knowledge we could then reuse with other projects as well. He wants to pay only for our services not for our intellectual well-being.
If the knowledge he wants does not exist in-house, we can either ask him to look for another service provider (not very likely, I guess) or we’ll actually pay for the acquisition of the required knowledge by our own (let aside that there are ways of billing without his knowing what he payed for – however, this is not what this blog is about and what the author stands for).
The Billing Price Does not Run Parallel to Knowledge Investments
A problem arises: During the time in which the responsible consultant is being trained or does his research, we can’t bill his hours, plus we might need to invest in off-the-job training. Would we increase the billing price for this consultant by 1$ for each dollar invested in his knowledge acquisition, theoretically we would always receive the same margin (margin = billing price – employee’s cost including investments in his knowledge). However, the actual return at the end of the year would be negative because we can’t bill the days on which the employee has acquired the knowledge.
Thus, we would need to increase the billing price for this consultant by 1.5$ for each dollar invested, right?