Organisations like the ones we write for are often growing quickly, are not bottlenecked by funding, and don’t find it easy to trade money for good work. If you’re at such an organisation, and you’re sourcing a service, hiring a consultant, or bringing in a contractor, it’s usually best to assume that you will want to buy a version of the service which is among the best versions of the service which are available.
If there’s a large market for the service, like a plumber, a bookkeeper, an internet service provider, or a software tool, skip the middle of the range and look into your pick of the well-regarded options towards the top of the market.
For more bespoke services, like advice on an unusual strategy question, or a lawyer for a new kind of problem, it’ll often make sense to prompt yourself with a question like:
Who would be the very best person in the world to help me with my project? Could my network get me an introduction to them?
Why?
1. Your people are very capable, so the bar to be net positive is high
If you’ve hired well, your staff are very capable. That raises the bar for outside help.
To be net valuable as an adviser, someone needs to beat whatever your staff member could come up with themselves, including after a chat with Claude.
To be net valuable at producing a (non-physical) service, someone needs to beat whatever your staff member plus Claude can mock up.
2. The benefit will often pencil out
A provider towards the top of the market will usually charge more, but this will buy you two things:
A better result. They’re more likely to actually be able to help (and help substantially).
Your staff's time back. You don't spend time evaluating and choosing between options which are only ‘ok’, and you spend less time managing the work and fixing errors.
(This might not be true if the top of the market is extremely expensive in absolute terms. There’s more on how to think about when this argument does and doesn’t hold below.)
Appendix: more detail on how to think about this
Obtaining a service ‘costs’ you financially, but the larger cost is usually the transaction costs: everything it takes on your side to get the service:
Discovery. Realising you have a need, and finding out who can meet it.
Trust. Becoming confident that they can deliver, and that working with them will be a good experience.
Transfer. Actually getting the service: contracts, onboarding, and project management.
For a short engagement, the transaction costs are often larger than the fee.
How going towards the top reduces the transaction costs
Discovery. You don’t need to survey the whole market.
Trust. You’re spending extra to ‘buy’ the assurance which comes with the track record or brand of the service.
Transfer. Providers towards the top are more often easy to work with: good comms, sensible project management, etc.
Should you go straight to the top, or shop around?
Rather than just considering how expensive something is, compare the transaction costs with the fee.
If the transaction costs are large compared to the fee, go towards the top. For organisations like ours, this covers most cases. For example:
Very short jobs, e.g. a plumber or an electrician. The fee is small, and getting three quotes takes more of your time than the job is worth.
Jobs where you have to invest a lot before you figure out how good they are, like a recruiter, or an office management company. This can especially suck if the proactive and competent seeming sales team which gets you onto a contract turns out to be different from the people who actually do the work.
Very cheap things, including most tech products.
But if the fee is large compared to the transaction costs (e.g. a 6 figure Salesforce architecture engagement), it can be worth shopping around.