Levelling the paying field

I trade in ideas and thinking skills. I’m very experienced, good at what I do, and I really want to help people who share my passion for ‘making a difference’ in society. If this is your ‘thing’ too, you’ll probably be familiar with the twin problems of pricing your offer:

i) People tend to undervalue learning investments, and
ii) People passionately keen to ‘make a difference’ are often undervalued themselves, with relatively low incomes

This presents us with a problem. It’s important to address i) by valuing your teaching appropriately, or you’ll be in a Catch 22 situation, embedding the very idea that the learning isn’t valuable. However, if the people you want to help can’t afford it, the temptation is to set a price and then discount.

Unfortunately, in spite of our best intentions, discounted pricing for ‘people on low incomes’ presents a second Catch 22. It reinforces a subconscious idea of deficiency by emphasising income rather capability and value to society. In fact, there’s a second nasty virus embedded in this approach, as it attacks self-esteem because capable people quite reasonably feel they shouldn’t lack the money.

So this year, rather than making ‘pay as you feel’ or ‘pay as you can’ offers, I’m experimenting with a new approach to try and break the vicious Catch 22 cycles above. I will budget in the normal way because a) I need to be clear about my value proposition and my break even, and b) some people just prefer to be given a price – but I’ll also set out a new option below.

How would it be if I used a ‘Fair Equivalence Exchange’ (the Z FEE ©!)? The idea is to shift the emphasis from the money you pay to the relationship we have. It assumes I am no better than you (we’re both capable people) and ensures we remain financially eye to eye in a relationship that levels our paying field. Here’s how it works:

The Z FEE involves working out my earnings on your payscale. It is based on conditions of Trust, Context and Conscience which need to be agreed before a calculation is made. Here are the terms:

Trust We will assume goodwill and good intent of each other, building Collaborative Advantage together with openness and constructive honesty
Context I appreciate the full value of this work may not be obvious because: i) it stretches into the future, ii) it takes unseen efforts of thought, travel and administrative time outside the room, and iii) it may feel right to take the credit for progress if the process has been manged with great skill
Conscience I accept the invitation to pay ‘fair equivalence‘ by working out the hourly rate Mike (who directs companies) would be paid if he was part of my leadership team.  

Since most of the things I do are delivered in hours or days, a calculation has to be made to work out what Z FEE results from annual earnings. Here’s how to do it:

Gross earnings, divided by 261 (working days/year), divided again by 7.5 (hours/day), times X (where X is the duration of event). 

Here are three worked examples for pricing per head, assuming a 3 hour event:

i) Someone unemployed. Let’s assume gross earnings are the same as the maxiumum Job Seekers Allowance, which is £3010/year.  Divided by 261 working days, the equivalence is £11.5/day. Divide this by 7.5 working hours, and you get £1.53/hour. A good conscience payment for this 3 hour event would be £4.59

ii) A lone trader/organisation where directors earn £20k
Divide the £20k gross by 261 gives £76.62/day, and divide again by 7.5 to get £10.21/hour. A good conscience payment for this 3 hour event would be £30.63

iii) Someone working where directors earn £50k
The same calculator gives £191.57/day, or £25.54/hour. A good conscience payment for this 3 hour event would be £76.62 

Since Trust is the first term, nobody has to show their workings and good conscience payments are unlikely to be that precise! My theory is that everyone I work with will feel better valued, and that wealthier clients won’t feel they’re being mugged by a Robin Hood crusader.

I’m still left with a question. Will the fees/head add up to enough to cover all the unpaid time in admin, travel etc. which a salary still covers? Many salaried people read freelancers fees as ‘very high’ because they’re not thinking of the time they’re paid, when freelancers are not. So to find out, I’ll apply the Z FEE day rate to all the time spent before and after a job to see if it really does level the paying field.

The first test is to see if anyone’s prepared to give it a go. If you fancy trying the Z FEE idea yourself, please be part of the experiment, using the Creative Commons licence below, and sharing the results so we can aggregate and compare notes.

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