Clients Articles

Why Fixed Fees are Dangerous

Why Fixed Fees are Dangerous

Who hates to track time?


If you’re the founder of your company, you are the most likely person to avoid time tracking because you’re so busy running the business.

Why is Avoiding Time Tracking a Problem?

You set the example for your team members when you do (positive example) or don’t (negative example) track your time. If your team members don’t track their time, you lose money. And if you don’t track your time, you also lose money. If you don’t know how long it takes to complete tasks and projects, you don’t know how to project manage and reach peak productivity.

Are Fixed Fees a Solution or a Problem?

You could lose as much as 50% of what you could bill. That’s what I’ve found to be true for all firms I’ve worked with over the years.

How do I know these firms undercharged? The numbers don’t lie.

When we complete a 3-Year Financial Model for our clients, we evaluate their firm’s past profitability. Then we create a model based on hourly rates and recommended utilization rates for each level of billable team member. When we compare the two methods of billing, the numbers are up to 50% less than billing by the hour.

We find that every single firm leaves thousands of dollars on the table when using fixed fees.

Many designers feel incredible stress over working multiple years to complete projects for which they underestimated fees. They still have to pay rent and salaries.

Sure, fixed fees could be a solution, but only under these circumstances:

  • You have a perfectly written scope of work.
  • The scope of work doesn’t change.
  • The client is decisive.
  • The project stays on schedule.
  • All team members are experienced and efficient.
  • Mistakes never happen.
  • Products never get discontinued.
  • Products never come in damaged.
  • You are 100% accurate in your budgeting.
  • You are 100% accurate in your ability to estimate time.

How often are some or all conditions present at the same time?


If the perfect conditions for a project don’t exist, then fixed fees are a problem and not a solution.

What are the Top Five Reasons Interior Designers Prefer Fixed Fees?

  1. Tracking time takes time.
  2. We get busy and forget to log our time.
  3. Our clients want predictable fees that stay within a budget.
  4. We want to make our clients happy.
  5. We get tired of hounding our team members to track their time.

Tread lightly and please don’t take the easy way out because it may seem easier to bill a client one large fee. Fixed fees can seem like a good idea until you lose money on them.

If you’re still determined to charge fixed fees, be sure to sign up for our FREE Easy Budget Calculator Call. Learn how to budget for projects quickly and easily. You’ll discover how to stay under budget and have happier clients.

And How to Avoid Them
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