The old mechanic and his hammer

As a small business owner, one of the biggest challenges is figuring out pricing.  You want to be fair to the customer, competitive with the industry, and yet of course profitable to make it worth your while.

This was a balance I struggled with and in some ways, never truly mastered.

Where pricing was concerned, I would price according to a desired hourly rate I felt my time was worth, divided by the amount of time a given project would take to complete. Most service businesses and freelancers, I think, follow this simple formula. I tended to low-ball the value of my time so I could win more contracts.  This, too, is a familiar action to most freelancers and start-up business owners.

Of course, the result was plenty of work; I never had trouble attracting new clients. However, this sacrificed profitability; I was stuck operating on narrow margins.  If a client was late to pay her bill or if she was delinquent altogether, that caused cash flow problems.

Even facing this losing formula, I had a difficult time raising my rates;  I felt at the time that nobody’s time was worth, say, $100/hour.  Worse still, I could not bring myself to invoice clients for small design tasks which took me only a few minutes to complete. I know my clients appreciated the generosity, but goodwill only goes so far when it comes to paying the mortgage.

Fortunately, someone much smarter (and much more successful) than I am hit me between the eyes with a dose of common sense business advice, prescribed in story form.

A mentor-friend of mine–I’ll call him “Robin” (since that’s his name)–shared a parable with me to illustrate the justification for appropriate pricing:

The story of the old mechanic and his hammer

The owner of a finicky automobile was having trouble diagnosing the source of his engine’s ailment.  The car just refused to start.  He spent hours attempting to repair it himself, replacing parts to no avail.

Finally (probably due to his wife’s insistence), the man asked a respected, old mechanic to provide assistance.

The old mechanic spent a couple minutes studying the car’s engine.  He produced a standard ball peen hammer from his toolbox, leaned under the hood and gave the starter a single, precise strike.

To the car owner’s amazement, this time when he turned the key in the ignition, the engine fired right up.

“That’ll be $100.” the old mechanic said.

“One hundred dollars?” The car owner gasped, “All you did was hit it with a hammer!”

“Correct.  That’s $5 for my time, and $95 for knowing where to aim.”

That is a short, simple story (as memorable parables usually are!), but I have always appreciated the lesson it provides.

How can you apply the moral of this parable to your professional life?  As always, we would love to hear your feedback!

About Frank Hurt

A woman once told him, "Frank when you grow up you're going to be brilliant and handsome."

It turns out Frank's mother is pretty good at predicting the future. Almost as good as Frank is at writing his own bio in third-person perspective.


  1. Do you know another sector of people who face this issue a lot? MUSICIANS AND SINGERS. People often expect musicians to perform for free, never mind the fact that it is their livelihood. “You want me to pay the pianist $150 for three songs?!” Well true, he is playing about 10 minutes worth of music. But that’s several hours of practice time prior to your event, plus purchasing and arranging the sheet music, and about 20 years of piano lessons. As a singer, people are constantly demanding that I sing for different functions, like I am a monkey who knows tricks. I know it comes off as crass and snobbish, but I think at a certain point in your “career” as a singer, you should be allowed to have certain standards about what you do and do not want to sing for. “There’s a talent show in the mall, we’re going to MAKE you sing.” Would you make a portrait artist come paint your bathroom?

    • I can empathize with your frustration, even though the only time I seem to be capable of holding a tune is when the shower is running! I think there might be a silver lining even with the type of customer you describe:

      1) Clearly, you are in demand. This affords you a stronger position with which to negotiate your rates and terms.

      2) This could be an educational opportunity; before you provide your rate to the customer, you might consider explaining how you intend on rehearsing before the day of the event, your careful selection of attire, etc. The customer will be mentally tabulating the hours involved, so the sticker shock will be less pronounced when you lead up to the actual fee.

      Above all else, I hope you will continue persisting with your career objectives and remember that these sorts of gigs are necessary stepping stones to something greater!

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