Setting Fees for a Firm
Maybe you’ve heard the expression, “No profit, no firm.” Professional services firms turn a profit only when team members are billing their time to clients. The goal is to bill an amount equivalent to the value of the work done.
Most service professionals we work with offer several billing arrangements, whether they are lawyers, architects, financial advisers or engineers.
A fixed fee is just as it sounds: a fixed amount of money for a defined set of work. It’s attractive when the job is well defined and can be completed quickly.
With a time-and-materials agreement, you receive a set rate for hours worked plus reimbursement for specific expenses. Projects where the scope is flexible lend themselves to this approach.
For jobs that are loaded with unknowns, a two-phase agreement allows firms to receive payment for initial work that will help define the project and then follow up with a second-phase fixed-fee or time-and-materials arrangement.
Some clients seeking professional services prefer to pay a recurring fee (weekly, monthly or quarterly).
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As any owner of an architectural or engineering firm will tell you, reporting of time and time management play a large part in hitting your profitability targets. Agency management software to track your work can help you maximize billable time, manage a large portfolio of projects and gain a competitive advantage.
At DataCraft, our goal is to make sure your business is fully integrated with the right business and accounting tools, with accurate and up-to-date status information, meaningful alerts and embedded project analysis and reporting.
Use the button below to download a guide to different pricing models and advice on how to manage pricing strategies.
