We switched to hourly billing because fixed-price felt risky.
Every scope change, every surprise, every client request—we could just bill for it. Problem solved, right?
Wrong.
Hourly billing created bad incentives for everyone.
Clients feared every conversation was billable. "Is this call going to cost me $500?" They'd batch questions. Avoid feedback. Second-guess reaching out when they needed help.
And honestly? We had no incentive to be efficient. Taking longer meant billing more. Not intentionally, but the incentive structure was broken.
So we went back to fixed-price. But not the way we did it before.
The fix wasn't hourly OR fixed-price. It was fixed-scope milestone billing:
→ Fixed price per milestone → Clear deliverables defined upfront → Change requests handled separately with new estimates → Client knows exactly what they're paying for → We're incentivized to be efficient and deliver quality
Best of both worlds.
Clients have budget predictability. We have revenue predictability. Nobody fears a conversation. And when scope changes (it always does), we handle it transparently with documented change requests.
The lesson? Most business problems aren't binary choices. The answer is usually "both, but structured differently."
Now our 5-phase delivery process uses fixed-scope milestones. Clients love it. We love it. And our 94% retention rate suggests it works.
What's a business practice you abandoned and then brought back in a different form?
#Consulting #Pricing #ProjectManagement #BusinessModel #Transparency
→ scopeforged.com
Philip Rehberger Founder, ScopeForged scopeforged.com
