The Fixed Fee Trap -- Sustainable Profit
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The Fixed Fee Trap -- Sustainable Profit
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Fixed fee billing can create better incentives for accounting firms, better client experiences, and more sustainable profitability. But it only works if you know your costs, understand the effort required, run thoughtful fee reviews, and keep tracking time.
In this episode, Max and Brooks talk through why hourly billing can punish efficiency, how automation changes the pricing conversation, how to calculate a baseline fixed fee, and why time tracking is still essential even when clients are not billed by the hour.
Chapters:
00:00 Why fixed fee matters
01:55 Better incentives for firms and clients
03:52 Automation makes hourly billing risky
05:25 Fixed fee vs. value-based billing
06:31 Managing fixed fee work in Karbon
07:07 Know your internal cost
10:55 Use a short first engagement
13:28 Run better fee reviews
15:09 Improve process or raise rates
18:57 Explain the price increase
20:04 Pricing takes math and people skills
22:26 When to lower a fee
24:51 The danger of autopilot price increases
27:15 Clients buy peace of mind
29:05 Efficiency creates capacity
31:15 Keep tracking time
33:04 Time data is firm intelligence
34:02 Closing thoughts