Does billing by the hour still make sense?

What’s an idea really worth? That’s the question posed by The New York Times in a provocative article that explores whether the notion of billing time still makes economic sense. 

August 08, 2013 |
Steven Burns

Editor's note: This is a sponsored article. All text and images were provided by the sponsor company.


What’s an idea really worth?

That’s the question posed by The New York Times in a provocative article that explores whether the notion of billing time – the standard income-generating model for most service professionals – still makes economic sense.

The concept of charging by units of time first came to the forefront in the 1950s when the American Bar Association suggested it. Concerned that lawyers were earning less than doctors and dentists, the A.B.A. advocated that law firms shun fixed-rate fees and sell their services in simple, easy-to-manage units. They took their cues from mass-produced manufacturing, believing that billing by the hour would allow well-managed firms to oversee staff productivity as mechanically as a conveyor belt managed its throughput.

Numerous other service professionals, including architects and engineers, adopted the model as standard protocol within their own practices.

But as the American economy has undergone dramatic shifts over the past few decades, global trade and technology have challenged any industry to profit from mass production philosophies.

Professional service firms have not been immune. In the accounting profession, for example, TurboTax® software and inexpensive overseas accountants have undervalued the routine services of an accounting firm.

Sound familiar?

The article profiles Jason Blumer, a South Carolina accountant who established some radical rules when he took over his dad’s small accounting firm: no time sheets, no dress code and absolutely no billable hours.

Blumer, according to the piece, realized that the billable hour was undercutting his value – it was his profession’s commodity. He believed it suggested to clients that he and his colleagues were interchangeable containers of finite, measurable units that could be traded for money. Worst of all, he thought billing by the hour incentivized long, boring projects rather than those that required specialized insight.

Blumer has emerged as a leading voice among the “Cliff Jumpers,” a national band of accountants who have abandoned the traditional bill-by-the-hour approach to focus on non-commodity accounting solutions for specific client groups.

It provides a compelling perspective on value-based pricing strategies for professional service firms.

Read more from The New York Times Magazine.

Steven Burns | The Business Behind Design

Steven Burns, FAIA spent 14 years managing the firm Burns + Beyerl Architects, and during that time the firm’s earnings grew at an average rate of 24% per year. After founding his own software company, Steve took his management expertise to BQE Software, where he is refining their business strategy and product development for the company’s groundbreaking project accounting solution, BQE Core.

Related Blogs

November 08, 2017 | BIM and Information Technology | The Business Behind Design

While AEC firms may not have the vast quantity of financial information that certain other types of busines...

November 03, 2017 | Building Team | The Business Behind Design

Having a clearly defined competitive brand and a fine-tuned marketing approach can give your firm a signifi...

October 26, 2017 | Industry Research | The Business Behind Design

Here are 5 ways to avoid a cash crunch by doing your part to help clients make their payments on time.

October 19, 2017 | AEC Tech | The Business Behind Design

For firms looking to propel their architectural design services to new heights and levels of sophistication...

October 03, 2017 | Designers | The Business Behind Design

Generally speaking, millennials want to be where the action is.

September 21, 2017 | Building Team | The Business Behind Design

Projects are the backbone of the way you do business. Isn’t it time that you step up their analysis?

Why employee advocacy is key to social media success
December 07, 2015 | Building Team | The Business Behind Design

Employee advocacy is key to boosting social media engagement, and employee advocacy is about more than just...

5 ways to bring data into marketing and business development
November 30, 2015 | Building Team | The Business Behind Design

Here are five ways to use data to enhance the client acquisition process

The benefits of selling your firm to employees

Other benefits of selling a firm to employees is the opportunity to mentor the next generation of employees and providing your clients with continuity. Photo: Flickr/

November 17, 2015 | Building Team | The Business Behind Design

One business advisor recommends professional services businesses to develop a group of employees who are wi...

Overlay Init