Time-based billing is running out of time.
For decades, the billable hour has been the sacred cow of professional services. Accounting firms, agencies, and law practices built entire business models around it. But the cracks are showing.
Clients are getting smarter. AI is getting faster. And executives are asking sharper questions:
“How come it can’t be done faster?”
“Why does it take so long?”
“Why is your rate so high when the output is the same?”
The moment your pricing model invites those questions, it’s already under pressure.
Time has never been the true measure of value — it’s just been a convenient one. Billing by the hour rewards slowness, not outcomes. It puts the focus on production, not progress.
When you charge for hours, you commoditize expertise. You teach clients to see your people as interchangeable — when, in reality, the differentiator is judgment, creativity, and trust.
As a fractional CFO, I’ve worked under both hourly and fixed-fee arrangements. The difference is stark.
On hourly projects, I had recurring tasks that I did every week. I could have built a simple template to do them faster — but I didn’t. The incentive wasn’t there. Investing the time to make it more efficient would have reduced my own billings.
Conversely, under a fixed-fee model, I’ve found myself far more flexible. I ebb and flow my work with the client’s needs. Some weeks are heavier, others lighter — but the focus shifts from time spent to impact delivered. I’m motivated to streamline, improve, and adapt because efficiency becomes my advantage, not my enemy.
AI isn’t the reason the billable hour will die — it’s just the accelerant.
As automation makes research, drafting, and analysis faster, clients will rightfully expect more speed and precision. They’ll start asking why an “eight-hour deliverable” now takes two. The firms that still bill by time will face a painful squeeze — fee compression driven by efficiency rather than value.
The professionals who adopt fixed or value-based models will thrive. They’ll align incentives with innovation, not preservation.
Fixed pricing isn’t just about predictability; it’s about permission. It creates space for innovation, learning, and doing things better — not just faster.
When the incentive shifts away from hours worked, teams can focus on what truly matters:
In other words, the stuff that actually builds trust and reputation.
The most forward-thinking firms are already moving in this direction. They’re productizing services, packaging expertise, and designing pricing around outcomes.
The real question isn’t “How long did it take?”
It’s “How much is it worth?”
The billable hour isn’t dead yet — but it’s on life support. And those who build their next model now will be the ones writing its eulogy, not reading it.
Author: Dave Bunce, CPA, CA