Is Flat Fee Billing Right for Your Firm?

Does flat fee billing really mean that you say goodbye to tracking hours spent on each project? In short, the answer is no.

Many designers utilize a flat-fee billing model whereby they invoice and collect their design fees at the onset of a project. In theory, this is done to alleviate the hassle of monthly time billing-for both the designer and the client. There is one amount for design fees and it’s paid upfront. The end.

But is that really the end of the story? The preparation of monthly time billing invoices to send to your clients may not be part of your process when a flat fee model is utilized. However, tracking time on each project should still be done.

Tracking billable hours on each project allows a comparison to be done between time spent at an hourly rate and the flat fee charged upfront. For example, if a flat fee of $15,000 is charged for design services, that flat fee essentially represents 100 hours (at an hourly design rate of $150). If more time than that is spent – money is lost on the flat fee. The only way to do an analysis on the flat fee is to track billable hours!

At The Dove Agency, we recommend that our clients utilizing flat fee billing continue to track time and perform post-project analysis on those flat fees. For clients considering switching from time billing to flat fee, we encourage a deep dive into hours spent on past projects in order to determine appropriate flat fee amounts.

Wondering if flat fee or time billing is right for your firm? Contact us to perform a detailed assessment of your design fees and what billing structure makes the most sense for your business.