Phase Billing

What is phase billing?

Phase billing structures an engagement into distinct phases, each with its own scope, budget, and billing event. Rather than billing continuously or only at completion, you invoice at the conclusion of each phase. Phase billing aligns payment with meaningful progress, creates natural review points, and allows scope adjustment between phases based on what was learned.

Designing phased engagements

Break the engagement into logical stages with clear boundaries. Define what each phase will accomplish and deliver. Set phase budgets that reflect anticipated effort. Specify that phase completion triggers billing. Consider whether phases are sequential or can overlap. Phased structures work well for projects with uncertain scope since later phases can be scoped based on early findings.

Phase billing and client decision points

Each phase boundary gives clients an opportunity to evaluate progress and decide whether to continue. This protects clients from runaway projects while protecting you from clients who might not pay a large final bill. For new client relationships or risky projects, phase billing reduces exposure for both parties. Think of phases as mini-engagements with their own kickoffs and closeouts.