Value-Based Fees, 3rd Edition

CHAPTER 2The Lunacy of Time-and-Materials Models: Who Wants to Be as Dumb as a Lawyer?

Million Dollar Consulting¹ was originally published in 1992, and my position that consultants should only charge by value and never by a time unit or numbers of people involved was a major disruption to the profession. Hence, this book in its original version soon followed to explain the approach in more detail.

Historically, consultants had billed for their services on the basis of time units, usually hourly rates or per diem assessments. There is no logical reason for doing so, but the underlying reasons seem to have included the following:

• Other professionals had set a precedent, most notably lawyers and accountants, both of whom preceded consultants on the business stage.² (Architects, designers, and other professionals also charge in this manner.) Recently, some New York attorneys made headlines by moving rates to $1,000 per hour, which they readily conceded they didn't expect anyone to pay. Lawyers still actually bill in six-minute increments and will charge 55 cents if they mail a letter for you.
• Most of the conventional working trades—plumbers, electricians, carpenters, and the like—have placed a premium on their time.
• Time is the universal objective, in that the client and the consultant can agree on the length of an hour or a day. (Of course, how much of that duration is spent on qualitative work is another matter entirely.)
• Consultants have had a ready-made lever for increasing ...