Dumping the Billable Hour (Again)

Jay Conrad Levinson and Michael W. McLaughlin, authors of Guerilla Marketing for Consultants write about one of my favorite topics:  abandoning the billable hour.  Some excerpts:

It’s time to dump the hourly rate once and for all.

To begin with, the hourly rate is a totally bogus number. It’s computed using very broad (and sometimes flawed) assumptions about a firm’s costs, volume and profit. And, many consultants toss those assumptions out the window and discount their hourly rates when they believe doing so will improve their chances of winning a project.

By charging a client for time alone, you completely undermine the expertise you’ve spent years building, and you limit the profit you can justifiably earn. Dozens of pricing alternatives exist that don’t rely on the hourly rate. Look for alternatives that lead to discussions with clients about the outcomes they want to achieve.

When pricing your next project, think results, not effort.

Thanks to Dana VanDen Huevel for the link.