Artificial intelligence is helping accounting firms complete work faster. Yet many firms still measure the value of that work by the hours billed. That creates a growing tension. Technology improves efficiency, while a traditional pricing model can make efficiency look like lost revenue.
Billable hours reward time recorded, not necessarily the value delivered. Moving beyond them does not mean ignoring time or abandoning sound engagement economics. It means asking whether time should remain the main measure of client value and professional contribution.
In Episode 9 of Qualified Opinions, Chris Vanover and co-host Stephanie Silva talk with Mike Maksymiw, Director of Aprio Alliance, about billable hours’ hold on public accounting and what a transition could involve. A former CPA firm partner, Mike resigned his partnership to challenge the profession’s norms. He has also served as Chair of the Connecticut Society of CPAs Board and is an alumnus of the AICPA Leadership Academy.
Watch the conversation excerpt.
Watch the complete Episode 9 conversation.
1. The Billable Hours Problem
Billable hours are deeply established because they offer firms a familiar way to record work, plan capacity, evaluate performance, and connect effort to revenue. Time data can support useful management decisions. The problem comes when hours become the primary measure of value, both for clients and for the people delivering the work.
Mike has described how a focus on charge hours can discourage creativity and efficiency. In a published article on shifting from charge hours to revenue generated, he shares that he generated $1.8 million against a $1.2 million revenue budget in 900 hours, rather than the 1,200 hours expected. His partner review focused on how he would make up the 300 hours. The gap between those measures illustrates the challenge. A system can recognize time not recorded far more readily than revenue generated or value delivered.
A billable-hour model can also create a difficult signal for efficient employees. If completing quality work in less time results in additional assignments but no recognition for the improvement, efficiency may feel like a penalty. Firms need measures that account for capacity and economics without allowing hours alone to define contribution.
2. Rethinking the Value of Services
Clients do not buy hours as an end in themselves. They rely on their accounting firm for outcomes such as accurate financial reporting, a well-supported audit opinion, clear communication, professional judgment, and confidence that important requirements have been addressed. The time required to deliver those outcomes is relevant to the firm’s costs, but it does not necessarily express the client’s perceived value.
That distinction becomes more visible as AI and other technology change how work gets done. If a firm can complete a task in fewer hours while maintaining the required quality, a time-based price may reduce the firm’s revenue even when the client receives the same or better service. The traditional equation of rate multiplied by time becomes less useful as a complete explanation of value.
This shift calls for stronger conversations before work begins. Firms can clarify what the engagement includes, what the client needs, which risks and complexities may affect delivery, and how success will be defined. Pricing becomes easier to explain when it is connected to the work’s purpose and scope, not only to the number of hours anticipated.
3. Breaking Free From Billable Hours
Moving away from hourly billing does not need to begin with a firm-wide overhaul. A fixed-fee audit engagement can be a practical starting point, particularly when the client relationship and scope are recurring and the work can be planned consistently. A defined fee gives the client greater cost predictability and gives the firm an opportunity to recognize the value of a well-managed process.
A fixed fee, however, is not automatically value-based pricing. Simply taking last year’s hours, multiplying them by a rate, and presenting the result as a package can preserve the same time-based logic under a different label. A stronger approach starts with the agreed scope and identifies the factors that could affect delivery, including organizational complexity, locations, systems, deadlines, or changes in the client’s circumstances. Clear assumptions and a process for addressing scope changes help both sides understand the engagement.
The transition can also be gradual. A firm might begin with a limited group of recurring engagements, review how well the scope and fee matched actual delivery, and refine its approach before expanding. Internal time tracking still matters during this process. It can help assess capacity, staffing, realization, and profitability, even when it no longer determines the client-facing price by itself.
4. Rewarding Efficiency, Not Hours
Pricing and performance measurement are connected. If a firm charges clients by time but evaluates professionals mainly by charge hours, both systems can reinforce the same behavior. A more balanced approach recognizes the revenue and results professionals generate while keeping hours as one measure of capacity.
Mike has proposed looking at metrics firms already track, including charge hours, realization, and assigned rates, to better understand revenue generated. This does not require treating hours as meaningless. It means using them to understand the work and the firm’s capacity rather than assuming that more hours always indicate more value.
Efficiency must also be defined carefully in audit and assurance work. The goal is not simply to finish faster. It is to reduce unnecessary effort through better planning, tools, and processes while maintaining professional standards, sufficient evidence, appropriate review, and a high-quality engagement. When firms recognize that distinction, they can encourage innovation without confusing speed with quality.
5. Standing Out Beyond Price
Auditing can be difficult to differentiate when clients view it primarily as a compliance expense. If the service appears interchangeable, price can become the most visible point of comparison. That puts pressure on firms to explain what clients receive beyond the required deliverable.
Differentiation starts with making the work’s practical value clear. Firms can demonstrate how they communicate throughout the engagement, anticipate issues, understand a client’s industry and operations, and deliver a predictable process. Responsiveness and sound judgment also matter. These qualities do not replace the audit’s compliance purpose. Rather, they help clients understand the professional service and confidence behind it.
Clear differentiation supports thoughtful pricing. When clients understand the scope, expertise, and experience of working with a firm, a fee can reflect more than estimated labor. CPAClub explored the broader case for value, results, and client relationships in its earlier article, “The Value Model: Why Billable Hours Aren’t Enough”. This conversation builds on that foundation by focusing on how AI, audit pricing, and firm incentives make the issue increasingly immediate.
Where this leaves you
A move beyond billable hours is not a single pricing decision. It is a progression in how your firm defines value, manages delivery, and supports its people.
- Pricing — Identify engagements where a defined scope and predictable process could support a fixed fee.
- Scope — Make assumptions, complexity drivers, deliverables, and change processes clear from the start.
- Capacity — Keep tracking time to understand workload and delivery economics, not as the only measure of value.
- Efficiency — Recognize improvements that save effort while maintaining audit quality and professional judgment.
- Differentiation — Explain the expertise, communication, and client experience that distinguish your firm beyond price.
- Progress — Pilot a measured change, learn from the results, and refine your approach before scaling.
Billable hours have served firms for generations, but they do not have to define the value of every engagement or every professional. If your firm is considering a more flexible approach to growth, quality, or operations, book a discovery session with CPAClub.
