Charging by the hour kills the incentive for productivity gains, which generally arise from building internal or external products that help you do things better. It kind of works in fields like law where the delivery has not changed much over the years, but delivering technical services like anything else in the technology business changes very rapidly.

Clients somehow need to be sold the idea that they will get better and cheaper delivery if they accept fixed costs, so that services can be productised, made profitable and improved, rather than buying one off non repeatable time for everything.

We are sort of seeing this as we get an increase in the number of product businesses being started, and so more types of activity are being productised.