Last Thursday's Wall Street Journal reports that many companies are starting to exchange per hour fee models for flat fee arrangements. This is certainly nothing new. When I worked in the General Counsel's Office for a Fortune 500 company 10 years ago, we insisted that service providers like publicists and attorneys work with us to create mutually beneficial flat fee arrangements.
The benefit to us was substantial savings and the ability to plan our department goals and budget without worrying about a surprise invoice at the end of the month. The benefit for our service providers was that they could be more efficient and focused with the services they provided. Unless they wanted to spend dozens of extra hours putting dozens of extra people to work on a project, they would work smarter to get it right the first time since they were not able to bill us for "do-overs."
If you provide a service, or even sell a product, over and over again to the same people, you might consider a similar flat fee arrangement. It's a simple matter in principle of agreeing to exchange what you have to offer in certain recurring amounts for a flat sum paid in advance or over a period of time at regular intervals. These types of arrangements provide a consistent and predictable revenue stream for you, and your customer saves time and money knowing exactly what he's getting each month. Flat fees for products and services are good way to do business in cases where trust has already been established and the goals of both you and your customer are clear and definable