What this is doing tying cost of goods more closely to the value of the goods than the production cost of those goods. As we're fond of pointing out here, the t

What this is doing tying cost of goods more closely to the value of the goods than the production cost of those goods. As we're fond of pointing out here, the true monetary cost of something is whatever people are willing to pay for it. Nonetheless, cost of work or cost of product is often quoted based on internal cost of production, not on value added. What the article is proposing is one way of breaking that habit. If I do some consulting and save a client a million dollars, they should be willing to pay an appreciable fraction of a million dollars for that advice. And that fraction that they're willing to pay doesn't change based on whether it took me four hours or four thousand to come up with my recommendation. The idea of charging based on the amount of effort it took you is silly. The effort is your problem, and irrelevant to the client. They should pay, and you should charge, based on the value that it gives them. The guidelines that the articles gives are basically guidelines for when the client can be trusted to give a fair value-based valuation of you work. However, what the technique does in general is it moves the focus away from cost-of-production and towards value. It's not the only way to do that. Fixed-bid, rather than hourly, contracts also do that and are easier to reliably negotiate without a good client relationship.