Hourly billing is a trap

There appears to be two kinds of accounting firms competing in the US market today.  I’ll refer to them as traditional and progressive.

The traditional model is all about the billable hour, working as many hours as possible and a complicated partnership structure.

The progressive model has either greatly reduced or dropped altogether billing by the hourly and switched to a more value-based, upfront pricing model (among other changes).


There are other differences of course.  Traditional firms seems to be older and larger.  Progressive firms seems to be younger and smaller.

Interestingly, we’re starting to see an uptick in traditional firms adopting lessons from progressive firms and benefitting from it.


However, progress is still slow and many in the industry are way behind.  The question I asked myself is why.  Why are so many firms still either resisting or reluctant to change?

The answer is complicated due to a number of factors, but if I had to point to one issue holding firms back the most…

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Billing by the hour.  

The old model is built on this construct and it can severely limit the progress a firm can make.  In essence, billing by the hour can ‘trap’ your firm into NOT making progress.


My question for you is, if it was required to make progress – would your firm consider switching away from the hourly billing model?


PS. For a ton of amazing content on why billing by the hour is nuts, check out the content produced by my friends Jonathan Stark and Geraldine Carter.

Talk soon,

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