Nice topic! A couple of different thoughts that I had on the subject and we have been internally testing. One includes, for digital marketing, the amount of time spent or “brain power” on a service. A monthly revenue model could be custom developed based on individual client requirements. The second, but most unlikely, could include working on a percentage, performance-based model. If our “brain power” is as good as we value, then the performance should materialize to expectation more often than not. The client wins since they only pay based on the outcome. The agency wins if a transaction outperforms and turns into an ongoing engagement. The downside is that the agency takes the time and money risk upfront with the “hope” they deliver for the client and stay within their budget.

Eliminating the billable hour is admirable and for some firms realistic depending on the kind of work they do. Selling products vs. services (something that many consultants do) is a way of developing a different pricing model, but it does not always lead to lasting relationships.

Per Abbie’s suggestion, this would make an interesting topic at Counselors in Asheville.

Am I seeing you in Asheville??

Certainly, you will use some sort of hourly rate calculation to come up with your fee, but that calculation doesn’t need to be shared with the client. Ultimately, if you get the job done in less time than you thought you would, you should benefit. If it takes you longer than you thought to get the job done, you should suffer.

The more we can tie professional services to outcomes (especially measurable ones), the easier it is to move away from billable hours and profit drag they create. Because the impact of their work is so traceable, many digital agencies (including the one I used to own) are partially or wholly compensated on actual, defined results (sales, leads, traffic, etc.).

Can we get PR into that methodology? Perhaps not entirely, but the inherent trackability of social media and PR 2.0 make it easier. At the end of the day, we need to be paid not to pound nails, but because we know where to pound.