Via this article, I learned about the following 6 reasons to stop charging by the hour:
Reason # 1
It undermines your ability to be acquired.
Reason # 2
It makes customers hesitate before calling you for advice.
Reason # 3
It creates a negative cash flow cycle because you have to know how many hours were worked before sending a bill.
Reason # 4
It forces employees to fill out time sheets.
Reason # 5
It leaves your customers feeling “nickel and dimed”.
Reason # 6
It provides a disincentive for your employees to work quickly and efficiently, ultimately peopling your company with a bloated and slow-moving set of clock watchers.
To know more about challenges regarding compensation, have a look at this presentation.