Excerpted from WSJ, “Firms Try Alternative to Hourly Fees” By Simona Covel, Apr 2, 2009
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For decades, marketing firms, accountants and other professional-service companies have all billed nearly the same way — by the hour, or, on occasion, with long-term contracts. But the recession is chipping away at that tradition, with companies forced to adopt performance-based pay and fixed prices in an effort to retain and attract clients.
The billing changes affect a broad swath of businesses, including marketing, advertising, accounting and recruiting. Even a few law firms have recently begun to talk about moving away from the billable hour, a hallmark of the legal-fee structure.
In recent months, advertising and communications company Button Worldwide began offering its clients an alternative to its regular billing after a few clients requested that the company cut monthly retainers for continuing work … Instead of a retainer, Button clients could use a pay-for-performance model where the company earns money only if it secures publicity for a client …
As the economy wavered this past summer, clients of Geary Interactive Inc. began balking at the $100 to $135 hourly rates charged by the digital marketing agency. To please clients and attract new ones, the agency started reducing its fees on a case-by-case basis — with a twist.
The reduced fees are now approximately $80 per hour, but Geary added a contractual bonus to be paid at the end of a certain time period if its marketing campaigns met or exceeded a client’s goals … The move also has meant a shift for a staff often accustomed to thinking about longer-term goals such as brand development. “There’s a higher sense of urgency,” Mr. Roell says …
Edit by SAC
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Full Article:
http://online.wsj.com/article/SB123862458936679977.html
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