Today, clients want consistency in their fees, teams work more efficiently with technology and reduce 'billables' as a result.
In an industry in which change and disruption are appearing in blogs, conferences and the like, we still see a resistance to moving away from time-based billing. The thoughts below (and full article) highlight this nicely.
By the turn of the millennium, it became increasingly clear to thinking professionals that as a primary revenue model, the billable hour was sick and unlikely to recover. List of symptoms: 1. It misaligns the interests of professional and client. The firm wants more of hours, the client wants less. 2. It focuses on efforts, inputs, hours, costs, activities, rather than what clients really buy: outputs and results. 3. It places all the transaction risk on the client. 4. It fosters a production mentality, not an entrepreneurial spirit. 4. It penalises advances in the firm’s effectiveness. The faster the firm can solve a problem, based on deepening expertise, the less the firm earns. 5. It commoditizes the firm’s talent and intellectual capital into a unit of time, which significantly reduces the firm’s ability to differentiate itself from the competition.