I've been a consultant, both independently and through two of the "Big 5" consulting firms, for the majority of my career.

I've recently discovered that I have a serious aversion to time-based billing, that's been buried deep down in my subconscious for a while. Because of this discovery, I've been trying hard to break the direct bond between hours worked and income generated.

The concept of value-based billing can be very appealing in this regard. The co-founder and CEO of FreshBooks, Mike McDerment, wrote a pretty interesting and entertaining eBook on the subject, called Breaking the Time Barrier -

http://www.freshbooks.com/breaking-the-time-barrier

It's worth a quick read, if for no other reason than to experience a different way of thinking when it comes to billing for services.

Here are some of the stumbling blocks I've experienced, when trying to put value-based billing into practice -

1 - Finding the clients who are willing to take the time to hear you out on the approach

2 - Finding the clients who can appreciate the approach, however if you get through #1, #2 seems to be a bit easier, since their minds are already open enough to consider it

3 - Waiting out the time it takes to find and educate the "right" clients, as Mike describes them in the book, when you have bills to pay :)

I do feel that value-based billing makes a lot of sense for both the client and the service provider.

One thing that value-based billing does well is resolve the paradox between the client's goal of having a project delivered at a reasonable price and the service provider's goal of generating revenue, which, by nature, are somewhat at odds from the outset, since the client usually wants to pay for the fewest # of hours possible (whether they admit that or not, that's another story), while the service provider wants to put the time in it takes to get the job done right.