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Experience comes at a price

What determines how much a consultant, a lawyer, an accountant, a recruiter or, indeed, anyone charges for their services? Is it technical capability, supply and demand economics? Or is it experience and knowledge?

I’m asking this question as recently I was challenged to reduce a fee on the grounds that the client felt it had been “one of my easiest placements”. I was fairly put-out by this rather unsubstantiated claim and my knee-jerk response was a fairly simple one: “By your logic, if it had been difficult, then I could have charged you double?”

Perhaps it would have been easier if I had told him about Charles Proteus Steinmetz, who was born on this day, April 9, 1865 and died October 26, 1923.

Steinmetz was a brilliant German-born mathematician and engineer who revolutionised the electrical power industry in the United States by playing a critical role in the development of the Alternating Current (AC). He was crucial in the inauguration of electricity in the modern era and overcame numerous setbacks to become a prodigiously talented mathematical genius.

After a glittering career working mainly for GE, Steinmetz retired to lecture at Schenectady’s Union College.

It was during this retirement that he was asked by Henry Ford to solve a very complex problem that Ford’s engineers had failed to fix at the River Rouge automotive plant. After carefully and patiently listening to the faulty generator (some accounts say for two days and nights) Steinmetz asked for a ladder and some chalk. He climbed up the ladder, made some careful measurements before making a chalk mark on the generator, which informed Ford’s previously bewildered technicians the exact location of the problem.

Later, Steinmetz submitted a bill to General Electric for $10,000 dollars. Henry Ford was somewhat perturbed at the bill and asked for an itemised invoice.

Steinmetz sent back the following invoice:

  1. Making chalk mark on generator $1
  2. Knowing where to place it $9,999


Scott Hutchinson is the Principal of Food & Drink at Interim Partners. 


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