Quick Questions: Client Billing Rates

Clients use a variety of models when billing clients.  The most common is rates by employee.  In other words, each employee gets their own billing rate for each project.  The collection of rates on Project A are different than Project B.

Why is this?

Because consulting firms provide a lot services, and offer the specific talents of many individuals.  Plus, they have a lot of clients.  That is a recipe for complex billing arrangements.  The sales department gets what they can.  The client pays what their willing to.  And we meet in the middle.  When the dust clears, there are specific rates for each project.

Other less frequently used models are “By category,” “By role,” “Option Year contracts,” or flat project rates.  Fixed-fee project are quite common, where the client is billed a percentage of the total on a milestone basis.  For example: one-third upon signing, one-third at beta, and one-third at delivery.

You’ll see the most common billing method in this video.