What is an alternative fee arrangement?

An alternative fee arrangement is any billing method other than traditional hourly billing. AFAs include fixed fees, capped fees, success fees, subscription pricing, and hybrid models. Clients increasingly request AFAs for budget predictability, and firms use them to capture value beyond time-based compensation.

When clients push back on hourly

'I need to know what this will cost.' Hourly cannot answer that. The pushback is often a request for predictability, not lower cost. Clients managing their own budgets need numbers they can plan around. The firm that offers certainty often wins the engagement.

Scope creep: the AFA killer

'While we are at it, can you also...' Those words erode margins. Define scope precisely in writing. List inclusions and exclusions. Create a change order process. Your AFA profitability depends entirely on scope discipline.