A few months ago, we walked away from a substantial government tender. The work was perfect for us. The internal customer wanted us specifically. But the procurement template required hourly rates with no option for a fixed-price response.
We were being asked to invent hourly rates for a business model that doesn’t use them. We had to walk away.
This isn’t unique to us. It’s happening across Australian IT consulting, costing organisations budget certainty and project success.
The Hourly Rate: An Accident of History
The billable hour isn’t some natural law of professional services. It’s a historical accident.
Before 1914, lawyers and accountants charged fixed fees reflecting the value and complexity of outcomes. Then came Reginald Heber Smith at the Boston Legal Aid Society. Managing 2,000 cases annually, he applied factory management principles to legal work, introducing timesheets to track internal costs.
This was meant as an internal tool, not a client billing method.
Over the decades, the hourly rate migrated to client billing. By the 1980s, it became standard because it was auditable and shifted all financial risk to the consultant’s clients.
The Problem With Paying by the Hour
When you pay by the hour, you reward consultants for taking longer. Efficiency is punished. The faster they work, the less they earn.
Few consultants fill in timesheets as they work. Most reconstruct hours from memory before deadlines. Research shows manual time-tracking has error rates of 15%-25%. For every $100,000 billed, $15,000 to $25,000 may be due to faulty memory.
Under time-and-materials billing, you assume 100% of the financial risk. As projects increase in complexity, costs rise. If the team is inexperienced, you pay for their learning. You’re paying for activity, not results.
Why We Chose Fixed-Price From Day One
When we started Tango, we chose no timesheets, no hourly billing, only fixed-price deliverables. This aligns our incentives with yours.
You know the cost before we start. No surprises. This matters especially in local government and not-for-profits, where budget overruns can derail community programs.
We absorb the risk of estimation errors or technical complexity. We’re incentivised to be efficient. If we deliver faster because we’ve solved similar problems before, you benefit from our experience.
We’re measured by whether we delivered what you needed, not hours logged. Staff are judged on quality and impact, not utilisation rates.
Traditional vendors add 15%-30% risk premiums to fixed-price quotes. But this is less expensive than hidden T&M costs when projects run over budget or inefficiencies pile up.
The Procurement Problem: Templates From Another Era
Many government procurement teams operate with 1980s templates designed for commoditised services such as building roads and collecting waste. For those services, hourly rates work.
But strategic IT consulting isn’t commoditised. Every organisation’s needs differ. Comparing consultants by hourly rate tells you nothing about final cost or outcome quality.
IT projects often represent a small fraction of total spend. Procurement teams default to standard rate schedules. Innovative firms that deliver better outcomes with budget certainty must either create new hourly rates or walk away.
But procurement reform is happening. As of November 17, 2025, the Commonwealth’s open tendering threshold increased from $80,000 to $125,000, creating opportunities for specialist providers offering independence and outcome-focused delivery.
When the System Does Work: Stories of Enlightened Procurement
We’ve seen enlightened internal customers create space for fixed-price responses. They understand that budget certainty matters more than meaningless unit-rate comparisons.
In one case, we were the sole bidder offering genuine budget certainty. Others provided hourly estimates with disclaimers. The customer chose certainty. The project came in on budget and on time.
In another instance, a supplier offered us a commission on a closed deal. We refused and suggested they discount our client instead. Initially, they refused because it would “expose their partner’s commercial construct.” Eventually, our client got that 10% discount.
That’s independence in practice. We shield your budget, not channel vendor revenue.
The Rigorous Obligation of Scope
Fixed-price models only work when the scope is properly defined.
Our Define-Select-Deliver framework always begins with Define. We create IT strategy roadmaps, conduct requirements analysis, and map your processes at a fixed price to deliver a blueprint for successful execution.
This upfront investment de-risks everything that follows. You move from ambiguity to certainty. Vendor responses become comparable because all vendors address the same well-defined requirements.
Without this rigour, a fixed price is dangerous. You risk building the wrong thing, technically on budget but strategically irrelevant.
What True Independence Means
Most IT consultancies derive income from technology vendors through commissions, referral fees, or implementation bonuses. This creates fundamental conflicts of interest.
True independence means we don’t develop, sell, or partner with providers, and we take no commissions. Our only income is your fee. We’re technology-agnostic, recommending solutions based purely on fit, not vendor relationships.
What You Can Do
Ask for fixed-price response options. Insist procurement teams allow fixed-price responses alongside T&M quotes.
Question vendor partnerships. Ask consultants directly: “Do you earn commissions from vendors you recommend?”
Invest in proper scoping. Engage an independent advisor to define requirements before procurement.
Value outcomes over activity. Choose based on who delivers outcomes with certainty, not the lowest hourly rates.
The Future Belongs to Certainty
Traditional models built on hourly billing and vendor partnerships are increasingly misaligned with organisational needs: budget certainty, impartial advice, and accountability for outcomes.
At Tango, we’ve built our business around a different approach. No timesheets. No hourly rates. No vendor commissions. Just fixed-price deliverables, absolute independence, and helping you make technology decisions from a position of knowledge and strength.
In the complex dance of technology and business, it truly takes two to tango. You deserve a partner moving in sync with you, not watching the clock.
Ready to explore what fixed-price, independent advice could mean for your organisation?
Let’s start with a conversation about your technology challenges.
