Interesting article, and sounds like it would be helpful to many professions. However, for my field of residential remodel architecture I have found that hourly billing works best and is used by most architects and designers I have met doing this kind of work.

If I goof something up, delete a drawing, etc., I don't bill the client for that time... it just lowers my hourly rate.

I do give all my clients a pretty accurate estimate of how many hours their project will take, based on a written scope. But there are many factors out of my control that can change that - usually adding hours/cost to the estimate.

In the past 9 years of running my business, I have only used project/fee based twice, when the client demanded it. I actually made out good on those projects, but could have easily "lost my shorts" if the design took a change during the process. Nearly all my clients prefer the hourly billing method once I explain why I bill that way. They pay for what they get. The residential remodel design process can take many twists and turns getting to that final design - I could do two schemes or twelve before a client likes it. Some like to investigate all options, others have a budget to meet. Often, the scope changes midstream, and it would be a pain and waste of my time to have to continually re-calculate a design fee based on a changing scope.

I disagree that it encourages dishonesty - I am an honest business owner and don't believe my billing style has anything to do with whether or not I am ripping off my clients. Often, my clients have never worked with an architect or designer and have no idea what is involved or how long it takes - I could just as easily take advantage of that using a fee based billing as an hourly system.

New construction projects are a different animal, and often designers will use a % of construction cost to set their fee (6-12% for residential). But for the remodel market, hourly is the way to go.

Today's a Holiday you know, no happy hour for me!