Aries Technology Group Blog

An example of how the billable time model doesn’t work in the real world.  Imagine if the airlines priced based on billable time:

The Knoxville businessperson stepped up to the airline ticket counter and asked to buy a ticket for a flight to Atlanta.

“No problem,” said the clerk, “but before I issue the ticket, I should remind you of the new way we charge for tickets.  This year we have adopted a ‘basic rate’ of three dollars a minute for our flights.  The clock starts when you check in at the gate and stops when you pick up your luggage.  We mail you a bill about two months after the flight.”

“Well, I guess that’s okay,” commented the businessperson.

The clerk continued, “Remember, we call it a ‘basic rate’ because we sometimes adjust that rate up or down if the flight is very empty or very full.  Too, we may multiply that rate if our expert pilot finds a tailwind.  We also adjust the rate according to what you will be doing in Atlanta.  You look like a businessperson, so I’ll assume it’s very important that you get there by plane, so we quadruple the basic rate.  Another thing, how much is your annual income?  You see, if you earn a great deal and it turns out the plane crashes, we will have to pay more on your spouse’s damage claim, and we have, of course, to consider that increased risk of the airline.”

The astounded businessperson choked, “But how much will this trip cost me?  How do I know you don’t slow down on purpose?  How do I know your bill will be correct?”

The clerk stared down over the end of his nose.  “I can see you’re not familiar with the complexities of airline work.  There are so many things we just can’t know in advance – the winds, traffic delays, the weather, the routing.  Airlines are a business, and we have to make a profit to stay in business.  Now don’t worry, we’re very honest and sensitive about all this billing business and I am sure you’ll be pleased with our fully itemized bill when you get it.  If there’s any question just call.”  Then the clerk whispered, “But just so we understand each other, if you don’t pay the bill in full and promptly, you’ll never fly on this airline again.”

“Oh,” grunted the Knoxville businessperson, “is there anything else I should know?”

The clerk smiled thoughtfully and murmured, “On your flight there is a new copilot in training, and we charge an additional 50 cents a mile.  Copilots are really very important, you know, to carry the pilot’s charts, to fly on clear calm days, even to land the plane if the pilot is busy with other matters.  Too, if you fly with us again, your copilot may have become your pilot.  Wouldn’t that be great?  One other thing, if the copilot uses computerized flight routing there will be an additional $75 charge.  But of course computerized flight routing is almost standard charge with technologically advanced airlines.”

“But I just wanted to get to my meeting in Atlanta and come home.  Now I don’t even know if I should fly at all,” groaned the businessperson.

The clerk smiled again.  “Mature passengers come to understand that flying is just a cost of doing business.  They never know how much it costs ‘til we bill them.  But then, there’s really no choice, is there, since that’s just the way it’s always been done?”

“No,” conceded the businessperson, “I guess not.”

And then the businessperson tried again.  “Why can’t you just give me a fixed price and I’ll decide if I’ll go or not?”

The clerk frowned.  “But we can’t do that.  That wouldn’t be fair to you.  We might overcharge you and then you’d be unhappy.  Or we might underestimate and then the airline would lose money and couldn’t maintain the planes, and we certainly don’t want that.”

And so the Knoxville businessperson came to hate airlines and took his revenge by regaling acquaintances at cocktail parties about the new pitfalls of airline travel.

Adapted from Richard C. Reed Billing Innovations: New Win-Win Ways to End Hourly Billing. Chicago: American Bar Association, 1996.                                                                                                                        

The idea of airlines charging for their time seems ridiculous, right?  However, that is exactly how most technology and software companies want to treat you.  You are expected to accept uncertainties regarding the price and timeline of a project as if it is a normal part of running your business.

These companies want you to believe that you are paying them to spend time working on a technology project.  However, what you really want is knowledge and experience that will be put to work solving your business issues and making your company more competitive and more profitable.

There’s no reason to come to hate technology and software companies.  Rather it’s a matter of working with a company who is more interested in your company than simply covering their rear ends by hiding behind billable time.