So this has been annoying me quite awhile. It’s about selling professional services for workflow.
Recently, I put up a poll on the P4P forums in reference to what we (salespeople) are charged when we sell billable hours. Out of the responses we’ve received, 57% of sales people reported that their cost is in between $126-$150 per hour, 14% for $101 – $125, another 14% $76-100, and then 14% for under $75. You can vote in that poll here.
We then asked “How much do you charge?” This would be billing to the end user. I was astonished that 50% were still sitting in the $125-$150 range, and 16% for $151-$175 per hour.
The small sampling tells me a few things. For one, maybe we don’t have enough of a sample yet, meaning we need more votes. On the other hand, it seems that the going rate for retail billable hours is somewhere in the $150 per hour range, and the cost for salespeople is in the same range. Are we as salespeople not making anything on these services?
At $150 per hour, there’s maybe $20 profit in every hour. If your commission is 30% of the profit, you’re getting $6 for every hour. If you sell 50 hours, the commission would be $300 and the billable retail would be $7,500! Thus, this means that commissions would only be 5% of the revenue!
Some will say “well you should get $200 per hour,” and I’ll tell them yeah, right, just try getting $200 per hour for someone to remote in.
Personally, I think the problem lies with the cost of services. If we’re not putting anyone on the road, then why is the cost per hour in the $121-$150 per hour range?
We all understand that we need to sell more workflow solutions. And we understand that page volumes in SMB accounts are migrating down. But, as salespeople, who have to earn most of their money in commissions, $6 per hour for commissions isn’t going to cut it. If I had to make a living on just selling workflows to an SMB account, I would seriously consider getting out of the business; It’s just not worth the time, the effort nor the aggravation.
Then we have the solution for the workflow. Let’s take something like NSI AutoStore 6.0 as an example because I’m familiar with this solution. In one instance the margin of profit from MSRP to sales cost is a whopping $178. Again, naysayers will rebut with, “oh, you need to sell that for over retail in order to make money.” Yeah, I still have to go to bed at night knowing that I’m charging more to my customer than what’s it worth. In the SMB market, with the rates I’ve reported I can’t see why I would keep on selling workflow solutions.
Probably, the best answer I can give is that we need to sell the workflow solution with the initial hardware sale. In recent opportunities I’ve included a small workflow with the sale of the MFP. Incorporating a single workflow has set me apart from the competition, and since the workflow was relieving a pain point in the office, there was no price objection. Take some time and vote, and let’s see if the numbers move some, here’s the poll “Professional Services Poll”.
Good selling!
