Money That Arrives on Schedule

Price the Result, Not the Hour

Twelve hours at £75 came to £900, and that was the figure I had typed into the proposal for a kitchen-fitting firm in Solihull in the autumn of 2015. The job was to rebuild their quoting process. Their quotes took nine days to reach customers, and by then half the customers had signed with someone faster. I knew how to fix it because I had fixed the same thing for two other firms that year. I planned to send the proposal that evening.

On the call beforehand I asked the owner, a man called Gareth, what the slow quotes were costing him. I asked out of politeness, not strategy.

"Last year? We lost eleven jobs we'd have won," he said. "Call it four grand profit each."

Forty-four thousand pounds. I was about to charge him £900 to stop it happening again.

I rewrote the proposal that night. The work was the same: twelve hours, a new quote template, a rule that every quote left within forty-eight hours. The price became £2,700. I sent it with one line explaining why: if the new process saved even one lost job a year, it paid for itself in three months. He signed the next morning and asked whether I did invoicing too.

That is value pricing, in plain words: you set the fee by what the result is worth to the customer, not by how long it takes you. Your hours still matter, because they decide whether the work is worth doing at all. They stop being the thing the customer is buying.

The arithmetic for Revenue per Hour of Attention is blunt. At £900 for twelve hours I earned £75 an hour. At £2,700 I earned £225. Same hours, same skill, same chai.

There are costs, and I paid all of them later. Value pricing only works when you can name the result in the customer's own numbers, which means asking questions some founders find awkward. It works badly for vague results ("better branding"), and it fails if you cannot deliver, because a customer paying for an outcome remembers the outcome. I lost one prospect in 2016 who wanted my hourly rate in writing and would not discuss anything else. He was entitled to it. I sent it, at £75, and he hired someone at £60.

Gareth's new quotes went out in thirty-one hours on average. He rang in March to tell me the Solihull jobs were coming back.

The Recurring Shift

In Meera's first year, her income behaved like Leicester weather. March brought £5,400, because three clients settled overdue invoices in the same week. April brought £2,100. May was worse, £1,850, and she spent part of it chasing a café owner on Queens Road who paid in instalments he chose himself. She told me later that she had checked her banking app most nights before bed, "the way you check a door you know you've locked."

The trouble was not that she earned too little across the year. It was that she never knew, on the first of any month, what that month would hold. One-off work is paid when the client feels like it, and clients feel like it at different times.

The package from Chapter 4 changed the mechanics. Recurring revenue means money that arrives on a fixed date without anyone deciding to send it: a subscription, a retainer, a monthly fee collected by direct debit. Meera moved her clients to £450 a month, collected on the first working day. Not all of them agreed. Two of her remaining hourly clients refused to commit to anything monthly, and she let one go rather than keep two systems running.

By the April of her second year she had seven clients on the package. The arithmetic is short: seven at £450 is £3,150, plus the Oadby surgery's £90 for associate expenses, making £3,240 that landed before she had made her morning tea. Her fixed costs, software and her two Specialist freelancers included, came to about £1,400 a month. So the rent, the tools and the people were covered by the second of the month, every month, and anything else was margin.

There is a cost, and it is real. A recurring client expects you to be there every month, including the month you would rather not be, and a cancellation hurts more than a lost one-off job, because you lose the next eleven payments as well. Meera lost one in the summer, a joiner who retired, and the hole in her forecast was £5,400 a year, not £450.

I asked her what had changed most. Not the money, she said.

"I stopped looking at the app at night," she wrote. "I look on the first, I see seven names, and I close it."

Five Numbers Every Monday

For three years my financial dashboard was a spreadsheet with forty-one tabs. I built it in the winter of 2018, the season after the accountant's note, mostly out of guilt. It tracked refunds by weekday, sales by country, the cost of each automation to the penny. I opened it perhaps once a quarter, because opening it meant losing an afternoon. A dashboard you avoid is worse than none, because it lets you believe you are keeping watch.

What I use now is an index card propped against the monitor on my desk in Pune. Every Monday, before I open email, I write five numbers on a fresh line. It takes ten minutes, and most of that is waiting for the bank's website to load.

• Cash in bank. The business account only. Divide it by your monthly expenses and you get the number of months you could last with no sales at all. This figure warns you about time. Below three months, I buy nothing that is not already budgeted.
• Monthly recurring revenue. The money that will arrive next month without anyone choosing to send it. It warns you about cancellations before they reach the bank. Meera saw her retiring joiner here three weeks before his last payment cleared.
• Profit margin. Last month's profit divided by last month's revenue. It warns you about creep: the subscription added in a good week, the freelancer whose hours drifted from six to nine without anyone saying so.
• Revenue per Hour of Attention. Last month's revenue divided by the hours you spent on the business. It warns you when growth is being paid for with you.
• Hours worked. The raw count for last week. It warns you about what the other four can hide.

That last number looks redundant, and I resisted it for a long time. It isn't. Revenue per Hour is a ratio, and a ratio can hold steady while both halves swell. £8,000 earned in 100 hours is £80 an hour. £12,000 earned in 150 hours is also £80 an hour. The figure on the card has not moved, but your evenings have gone, and only the raw count shows it.

Read the column, not the cell. One bad Monday means a client paid late or you had a cold. Three falling lines in a row mean something has changed, and you should find out what before the bank tells you.

This year's card has nineteen lines on it. I check the hours column first, and it has been 31 for the past four weeks.

The Buffer and the Leaks

The first number on the card only works if there is something behind it. I keep six months of business expenses in a separate savings account that I treat as untouchable, and I recommend you aim for the same. For Meera that meant £1,400 a month multiplied by six: £8,400. She built it by moving £700 out on the third of every month, the day after her direct debits cleared, and it took her a year. The cost is obvious. That money sits there earning very little, when it could be paying for a course, a better laptop or a holiday she had postponed twice. What it buys is the ability to lose a client, or two, without panicking and saying yes to the wrong work.

Tax deserves its own account. Every time a payment lands, Meera moves 25% of it into a pot labelled HMRC NOT YOURS. Her accountant chose the figure from her actual numbers. I am not a tax adviser, and yours may well be different. She learned the habit the hard way. Her first January bill in the second year included a "payment on account", which is half of the following year's tax collected in advance, and nobody had warned her. The bill was £3,900 larger than she expected. She paid it from the buffer, then spent four months refilling it.

Leaks are slower and quieter. In April 2023 I exported a year of card statements and highlighted every charge that repeated. The leaks came to £340 a month. There was a video-hosting plan for a course I had retired in 2021, two form builders doing the same job, a transcription tool I had used once for a podcast interview, and an annual font licence for a typeface I no longer liked. Each one had made sense on the day I signed up. Together they cost £4,080 a year, which is roughly what I charge for three weeks of consulting, and I had been paying it to forget.

This Week

Download twelve months of business bank and card statements and mark every charge that repeats. Cancel anything you have not opened in sixty days. Open a separate account for tax and move a percentage of the next payment you receive into it, even if the percentage is a guess. Then work out your buffer: monthly expenses multiplied by six, and how many months it would take to reach that figure at a rate you could actually keep.

Meera's buffer reached £8,400 in the April of her third year. She rang me that evening, and she did not sound pleased so much as puzzled. "It's all there," she said. "So what am I saving for, exactly?"