I think small businesses can get slightly obsessed with hourly rates.
"How much per hour?"
It's an understandable question.
Budgets matter. Of course they do. If you're considering bringing somebody into your business, you need to know what it's going to cost.
But an hourly rate, on its own, tells you remarkably little about whether something represents good value.
Let's say Person A charges £15 an hour and takes five hours to complete something.
You've spent £75.
Person B charges £35 an hour and completes the same thing properly in two hours.
You've spent £70.
Which one was cheaper?
Now let's add another layer.
Person A needed several emails explaining the task. They came back with questions. You had to clarify what you meant. The first version needed correcting and you spent another hour checking everything before it could actually be used.
Person B understood the outcome, completed it properly and sent you a message:
"Sorted."
Now which one was cheaper?
And perhaps more importantly:
Which one actually created capacity in your business?
An hourly rate isn't the same thing as the cost of an outcome
This is the distinction I think growing businesses need to understand when they're comparing outsourced support.
If you only compare hourly rates, you're assuming that every hour produces exactly the same amount and quality of work.
It doesn't.
Experience matters.
Expertise matters.
Efficiency matters.
Understanding the context matters.
The amount of management required matters.
And the quality of the outcome certainly matters.
Someone who has completed a particular task hundreds of times may spot in ten minutes what somebody less experienced spends an hour trying to work out.
That doesn't make the more experienced person expensive.
It makes them experienced.
And that experience is part of what you're buying.
Businesses don't actually want hours
This is why I'm increasingly reluctant to talk about outsourcing purely in terms of hourly cost.
Nobody wakes up on Monday morning thinking:
"What I desperately need today is four hours of administration."
You want your CRM sorted.
You want the event organised.
You want the clients followed up.
You want the invoices reconciled.
You want the email campaign sent.
You want the project moving.
You want the system working.
You want the thing that's been sitting on your list for six weeks to finally disappear from it.
You want an outcome.
The hours are simply one mechanism for calculating part of the cost of achieving it.
So when you're comparing support, I'd ask a much more useful question:
What will it cost us to get this result?
Don't forget the cost of your own time
This is one of the costs that rarely appears on a quote.
Your time.
Let's go back to Person A.
They charge less per hour, but they need a detailed brief.
Then they email with a question.
Then another.
You have a meeting.
The work comes back and needs changing.
You spend an hour checking it.
Perhaps you eventually decide it'll be quicker to fix the final bits yourself.
Their invoice might still look cheaper.
But how much of your time did the work consume?
If you're the business owner, CEO, director or senior manager, your time has value too.
And there's an opportunity cost attached to it.
Every hour you spend explaining, checking, correcting or finishing work is an hour you aren't spending doing the things that genuinely require you.
That's why good outsourcing shouldn't simply move a task from your to-do list onto somebody else's.
It should reduce the amount of your attention that task requires.
That's a much better measure of whether you've genuinely created capacity.
Cheap support can become expensive very quickly
I'm not suggesting that the highest hourly rate automatically means the best support.
It doesn't.
And I'm certainly not suggesting businesses should ignore budgets.
What I am saying is that price and value aren't the same thing.
A cheaper option that requires twice as long, significant management and repeated corrections may cost the organisation far more than the invoice suggests.
Likewise, paying a specialist rate for routine work that doesn't require specialist expertise doesn't make sense either.
The goal isn't to buy the cheapest person.
And it isn't to buy the most expensive.
It's to put the right work with the right level of expertise.
That's where good resource planning comes in.
Compare outsourced support with employment properly
There's another comparison I see businesses make that doesn't tell the whole story.
They look at an outsourced or fractional support rate and compare it directly with an employee's hourly wage.
Those two figures aren't equivalent.
An employee's cost to an organisation isn't simply their salary divided by the number of hours they work.
Depending on the circumstances, employment can also involve Employer National Insurance, pension contributions, paid annual leave, equipment, software, recruitment, onboarding, training and management time.
That doesn't make employment a bad option.
For many roles, having somebody permanently embedded within the organisation is absolutely the right choice.
But if you're deciding between employing somebody and using outsourced or fractional support, compare the whole resource model rather than two hourly numbers.
What capability do you need?
How frequently do you need it?
Does it need to sit inside the organisation?
Do you have enough work to create a genuine role?
How much management will it require?
Do you need one skill or several?
Those questions give you a much better comparison.
What happens when you don't need the same skill every day?
This is particularly relevant for smaller organisations.
Your support needs probably aren't beautifully consistent.
You might need regular administration every week.
You might need more bookkeeping around month end.
You might need marketing expertise when you're running a campaign.
You may need a project manager intensively for three months and then barely at all.
Perhaps your website needs attention this month but won't need touching again for another six.
That's one of the reasons fractional business support can work so well for SMEs, charities and CICs.
You can build the resource around the work rather than trying to create one permanent role containing every possible requirement.
At Ducks In A Row, we've built a multi-skilled team for exactly this reason.
I don't expect one person to know everything.
If something requires a particular skill, I want somebody with that skill working on it.
The value isn't simply access to somebody's time.
It's access to the right capability when it's needed.
Expertise can make the hour smaller
There's a strange thing that happens when we price expertise by the hour.
The better somebody becomes at their job, the quicker they may become at doing it.
If we're not careful, we then accidentally penalise them for being good.
Imagine two people are asked to fix the same problem.
One spends four hours researching it, trying different things and eventually finds the solution.
The other recognises the problem immediately because they've seen it twenty times before and fixes it in forty-five minutes.
If you only look at hours, the first person apparently provided more.
They didn't.
They took longer.
Again, this doesn't mean speed is the only measure of value. Some work genuinely needs time, thought and care.
But it does demonstrate why hourly rates are such a poor measure when they're viewed in isolation.
You're also paying for everything somebody learnt before they started working on your problem.
Ask better questions when you're buying support
Instead of beginning with:
"What's your hourly rate?"
Try asking:
What outcome are we trying to achieve?
What level of expertise does this work actually require?
How long is it realistically likely to take?
How much input will we need to provide?
Who will be responsible for the outcome?
How much management will this require from us?
Could somebody with the right expertise complete it more efficiently?
Do we need this capability regularly or occasionally?
And ultimately:
What is the most cost-effective way to achieve the result the organisation needs?
That's a much more useful commercial conversation.
Sometimes employment will win
Sometimes outsourcing will.
Sometimes a freelancer will.
Sometimes fractional support will give you access to expertise you couldn't justify employing permanently.
Sometimes the smartest option will be to train somebody already within the business.
Sometimes technology can remove the task completely.
And very often, the right support structure will involve a combination of several of those things.
That's why I don't think businesses should start with the resource.
Start with the outcome.
Then decide what expertise, capacity and support will get you there most effectively.
Because the cheapest hourly rate isn't necessarily the cheapest solution.
And the highest hourly rate isn't necessarily the most expensive.
The question isn't: "How cheap can I buy an hour?"
It's:
"What is the most cost-effective way to achieve the outcome my business needs?"
Those are very different conversations.
And I think the second one is the conversation growing organisations should be having.
