Clients must receive a value greater than the cost of the services we provide.
If we agree with this statement, how can we justify offering our customers estimates of required time and related billing rates?
The only reasonable way to assist the client in comparing the value received to a cost is to price for specific services (scope) at a fixed priced (cost). Pricing for our services based on time and the applicable billing rate is clearly a conflict of interest between the consultant and the client. Why? Because clients want consultants to spend as little time as possible and consultants want to spend as much time as possible.
Instead, we should be focusing on creating as much value for the client as possible at a cost that is lower than the value they receive. With fixed scope and price agreements, this allows us to focus on what is important to the client without the client having to worry about the time being spent and the related cost escalation.
Therefore, fixed pricing allows us a win-win relationship with our clients by providing a defined services value to them at a service fee that is profitable to us as well.