Sunday, January 23, 2011

Billing woes

I have an issue that I've been thinking about for a while now but I'm no closer to a solution.

Sometimes, relatively frequently even, I do myself out of money by completing cases in a too timely and efficient manner.

Is that even possible, you ask?

Yes. It is.

It's not just a matter of completing a case within a Client's budget. I don't really have a problem with that and I think it shows good planning on my part.

What I am referring to is when I deliver a result so far under budget that *I* come out feeling somehow cheated.

Take Mr Hay (not his real name), an older gentleman who resided out of town, who was wondering whether his younger girlfriend - that he had set up in an apartment and was paying an "allowance" to, as well as picking up most of her bills - was being faithful to him while he was away.

Initially, Mr Hay was prepared to commit to a budget of around $3000 to find out what she was up to.

Well, it didn't take me very long (around 3 hours investigation time) to determine that his girlfriend was filling in time as a sex worker and advertising her services both online and in print publications, had been using 5 different aliases in the past few years, and some other unsavoury information.

Total bill to Mr Hay was under $400. I have to admit that I really outdid myself there!

Now, where I'm getting at that through hard work and judicious planning on my part, I did myself out of $2600, something that Mr Hay obviously thought the case was worth - to him at least.

Should I have charged him the full $3000 for the 3 hours work?

I'm thinking that perhaps I should have, or at least more than just for time worked, because I got him the result he was after. Value-based, rather than time-based billing.

While I thought about it at the time I was not too comfortable with that idea. I thought, perhaps, it would be a little disingenuous to do so.

Now, and in light of a number of similar situations - although admittedly not quite to that degree - I'm thinking that perhaps there is nothing wrong with some combination of value-based and time-based billing.

The idea of a value-based fee presupposes a successful outcome or resolution. Unfortunately, there is no such guarantee as so much in any investigation lies outside our control. All we can really guarantee is that we will put the time into their case; hence the usual time-based billing approach.

However, the idea that I penalise myself for a successful and efficient resolution but am rewarded for a lengthy, bumbling, investigation - irrespective of outcome - seems a little incongruous.

Is there a simple solution?

Probably not.


  1. Add a minimum call out fee?

  2. Yeah, toyed with that idea as well. Probably still thinking about it.

    I'm thinking what I should have done is just presented an invoice for $2000ish along with the report. The Client would have been happy (well, not 'happy' happy obviously) that not only did we achieve a result but also did so significantly under budget.

    And I would have had that satisfied feelings of a good job well done.


  3. You should bill for the value of the job - its a common practice in other industries. Probably not the whole 3 grand worth, but enough to make it worthwhile.

    This would work for the majority of the work - you can always go back to standard hourly rate for the work that doesn't fit this model.

    Remember they are paying you for your expertise - make sure you charge accordingly...

  4. I'm sure a sufficiently entrepreneurial gentleman could come up with a way to fill (and bill) a few more hours on that job... even if they were somewhat notional hours. How is joe public supposed to know how many hours it takes you to find out that sort of information.

    Take IT services. I'm damn sure that it actually only takes our web providers 5 minutes to do some of the work we ask them to, but you better believe we get charged a minimum full hour / hour and a half for absolutely everything we ask for, and what can we do?

  5. I don't believe in padding invoices, however, I do believe in assigning a proper value on a good job well done.

  6. You say potato, I say potatoe..

  7. I have a prospective client I'm trying this out on at the moment.

    Gave him a choice between hourly rate and set-fee. He's chosen the set fee (4 hour billing equivalent) and I've had a preliminary look and have pretty much have completed task within 10 minutes.

    To be fair, there was an element of luck involved. I had no idea the subject would be this straightforward to locate.

    Still awaiting payment from client before I pass on report.