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Until recently, I have given most clients the option to pay me by the hour, even if I also quoted them a flat fee. No more. It just doesn't make sense. In my debt collection defense cases, for example, I usually charge 20-30% (with minimums) as a flat fee. I was doing my billing, when I realized an hourly client has effectively paid less than 5%. Sure, they have paid for my time, but what about the value of the results I achieved?
So no more. For 2010 (at least), I will only charge flat fees. In my fledgling business practice, I will only charge monthly fees, with flat fees for things like litigation.
I hope most of you have also tried flat fees. It seems scary, at first, I know. But soon, you realize you are making the same money more reliably--or possibly more money, since you no longer dock your own hours, spend a ton of time billing, or tie value to time.
Many people worry about getting burned on cases that get out of hand. Sure, it can happen. I have been burned once in three years. The cases where I have not been burned more than make up for that one case. Way more than make up for it.
Give it a go and let me know how it goes for you. I would love to see how others go about setting fees and what kind of results you see.