Client billing can comprise hourly billing, flat-fee, retainer-based billing, and value-based billing.
You can use any one of these ways.
The hourly billing method is like what it sounds, it is billing the client according to a standard hourly rate depending on the quantity of time it takes to do the work or finish off a project. Utilizing this method, the firm is assured to be paid for every hour they worked.
But the issue regarding hourly billing is that the better and extra efficient you get, the less you make, which doesn’t encourage you to get better or more efficient. Hourly billing is not a perfect way of doing business, as it can result in conflict between you and the client. It is hardly a win for anyone involved.
In Flat-fee billing, the accounting firm totals the number of hours a project will take to finalize and multiplies that by the hourly rate. Both the parties approve of the project cost, and the expense is fixed.
One of the positives with flat-fee billing is that it’s trustworthy. You know how much profit you can predict, and your client knows how much the project will cost them. The more profitable you become, the more efficient you will become as well.
Retainer-based billing is probably different from what you are used to. Retainer-based billing is based on hours, but it is different from hourly billing. With this type of billing, both you and your client agree on the number of hours per week you will allocate for their project and the hourly fee.
There are several different approaches to value-based billing. The value-based billing method is unique from all of the other billing methods because it doesn’t involve hours at all. It’s based on value. Mainly, the overall value you deliver to the client regardless of the number of hours the project takes.
You are expected to know what the market will pay for the product or service you’re delivering. The more niche delivered by your service, the more likely it will demand a higher value.
Value-based billing also expects the firm to determine the services that the client values the most so the pricing can be determined accordingly. The higher the price of the product/service, the higher the margin can be on that specific item.
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