As a consultant, I’ve come to the conclusion that hourly rates can be quite toxic. The only circumstance in which I feel comfortable working under those conditions is if I’m dedicated and onsite with the client.

For those of us working remotely or virtually, we manage our time quite fluidly based on multiple client, internal and personal objectives. Hourly rates tend to instill implicit expectations in clients, such as you are always on the clock and therefore immediate turnaround times are realistic. You may have initially set expectations very well, but quickly and without your knowledge, you are consistently not meeting the expectations of your client. What makes matters worse is the client is expecting deliverables, but instead they are getting hourly invoices.

Hourly rates can also be quite toxic to internal productivity as well. If you’re translating costs into hourly rates to track how profitable the firm is, you could also be inherently instilling a quite detrimental mentality into your consulting staff. Their mentality quickly shifts from purely helping the client to accomplishing the original expectations as quickly as possible and in as little time as possible. The instillation happens even more quickly if consultants are tracking their time daily and reviewing calculated hourly rates regularly.

One solution is to fix bid client projects based on deliverables or attainment of objectives and shield any internal calculation of hourly rates from consultants. This would keep consultants focused on helping the client, which should be their primary objective.