3/24/2005

Hourly Billing Alternatives

This post from The Accounting Blog via this Matt Homan post explains why hourly billing sucks:

"1) Customers hate it... The simple truth is that nobody likes hourly rates, except the CPAs and lawyers who charge them.

2) Total cost: unknown. With hourly billing the customer has no idea what their total cost will be- they only know they hourly rate...

3) "Berlin Wall" of communication. With hourly billing, people are reluctant to ask...questions because they know that the meter is always running"

Alternatives to hourly billing that I often use in my practice include:

Fixed or Flat Fee
Variations On Standard Contingency Fees
Blended Fees
Budgeted Fees

explained here;

Discounted Hourly Fees
Maximum Fees
Unit Fees

reviewed here;

Retrospective Based on Value
Relative Value

explicated here; and

Equity Based Fees

mentioned here.