We spoke about billable hours and quoting by the project yesterday.

Those of us who provide services are finding out that our clients are balking at billable-hour-based pricing.

After all, there’s no way to know how much a project is going to cost- until it’s (perhaps) too late.

But, as I said yesterday, there are plenty of situations where it’s impossible to properly guesstimate the costs.  And, even if we did, what happens when a client decides that they want far more hand-holding than we anticipated?

Let’s pick a simple example.  We have a bunch of clients for whom we prepare their financial records.

Those that agree to use PCLaw, clio, Leap, Xero, or QuickBooks get pretty firm pricing.  For example, a nascent (non-legal) client, with only 25 transactions a month, knows that their monthly costs are $ 60 a month.  (PCLaw and Leap are  far more expensive than Xero or Quickbooks, so those costs are much higher. Clio is an add-on to Xero.)  That includes the monthly cost of the program.  Those that have 150 transactions each month know they are in for $ 120 a month- for that fee they get full accounting, a profit/loss statement, a balance sheet, and at least 1 KPI (Key Performance Indicator) monitor each month.

For those clients who use their own process- which typically is a variation on a shoebox- we only bill by the hour.  Because we have to go through each transaction, categorize them, and enter them into a valid accounting system.  Yet, we do have rough ideas of what this will cost our client and advise them of same.

But, those fees don’t cover the calls that come in, asking us to evaluate the purchase of a new piece of equipment, an acquisition, payroll, etc.  For those issues, we do bill by the hour- because the client knows exactly how much time they used- and we had no means to determine in advance what amount of services they would also demand of us.

There are plenty of firms for whom we prepare project quotes.  After reviewing the needs of the client and with two or three options for the “hand-holding” we will provide them over the course of the contract.   And, our goal is to provide a fee structure that matches the value of what we are providing said client.

It’s something y’all should be prepared to do.  Because it’s the future for all service work.

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