Value-Based Fees: How to Charge—and Get—What You're Worth: A Guide for Consultants, Second Edition

Interlude: The Case of the Annoying Accountants

I had been hired to help a major consulting firm transition just one of its practices to value-based fees. This practice was considered unusually appropriate in its subject area and was led by a partner who fully backed the conversion. It was hoped that the "pilot" would help countervail the ossified culture of billing by the hour ingrained in the rest of the company.

We worked to select those people who would be most amenable within the practice and who had accounts or prospects most likely to be converted by a value-based approach and its benefits to the client, such as no meter running, no investment decisions needed daily, and so forth.

In short, we maximized our chances of success, and it worked.

Fairly soon we had two clients converted and all new prospects discussing solely value-based fees. New proposals talked only of value-based fees. Then an unexpected monkey wrench was tossed into the works.

In the largest such project, about $460,000 in revenue, the accounting department said they would not accept the business as earned income or distribute the credit unless the monies were accounted for in terms of hours applied and within the limits of hourly rates of partners, associates, and so forth. In other words, since there were neither enough billable hours nor sufficient leeway on charges by the hour, the project couldn't be accounted for!

The practice leader was at his wits' end, but the head of accounting refused to budge, ...