In defence of the billable hour

19 Jul, 2025

The billable hour is not cool.

Whenever I hear it mentioned, I hear that it’s no longer the smart way to bill for work. No one cares about hours, they care about value. And value based pricing means we can break through the time and materials ceiling.

Everyone’s saying the billable hour is over. But is that actually true for your agency?

The way I see it, it isn’t going anywhere.

Why people think it’s dead

I get it. You only have so many hours in a day, so time and materials sets a limit to what you, and your team, can earn.

You are punished for being efficient, if things take less time then you make less money for doing them.

And efficiency is the name of the game now.

If you aren’t getting 100x more output per hour by telling a chatbot it’s a consultancy level strategist and then copy and pasting its answer… then you’re basically toast.

So the trend seems to be: “time’s up for time tracking”

(I came up with that, it’s social media card ready)

But I don’t think time is up…

What people are missing about value

I’m not anti value based pricing.

When you look at it from the client’s side, it makes sense. They don’t want five hours of work, they want the result.

But I don’t think we are going to be punished for being efficient. I think efficiency becomes table-stakes.

“Table-stakes” is enjoyable jargon for ‘necessary’.

It means that everyone will just expect you to be efficient.

The reason why is value.

You can now do that five hours of work in five minutes is because of the tools you’re using, tools your clients and competitors now have access to too.

So what exactly is the value you’re creating and pricing for?

If it’s not yours. If you’re simply riding on the back of commoditised AI, then we haven’t gone from billable hour to value based pricing; we’ve gone from billable hour to nothing to bill for at all.

If this 5 hours of work was your agency’s main service offering

This shift is going to make it harder to be a low value offering to the masses type agency. This hints at how the agency landscape may change and how strategic high-value services are the future.

If you are investing in efficiency beyond commoditised AI

This is interesting and worthy of discussion in another edition. If you are going to differentiate on efficiency, then you are going to have to be better than commoditised AI. That differentiation takes focus and energy away from your actual service offering. How will that go?

If you are struggling with how to price

Drop me a line and I'll share a framework to help you decide.

Why it’s still valuable

Pricing on an outcome means knowing what the outcome will be.

We said before: the client doesn’t want five hours of work, they want the result.

In reality they don’t know what they want. That’s why they’ve come to you. If you sell discovery, you know this well.

One way to approach this is productising the service. Explaining the possible outcome, and if they want that, then executing.

But what if you don’t know the outcome yet either?

What if what you sell is the skill of setting an outcome and forming a strategy to get there?

There are some places you can’t go with value based pricing, and they are exciting and important places. Now more than ever.

We are going to be doing less work that has fixed processes and certain outcomes because that work is going away.

We need to work on projects where no one knows the shape or scope at the outset.

What can’t be uncertain is that we get paid, so we need a way to bill for these.

We might get paid in uncool ways.

The billable hour might not be done yet.