A very happy & prosperous Deepawali to all our Indian readers.
So, did you figure out the difference between stage based billing and outcome based billing?
A lot of time when I have made this query from people working with me, they end up quoting processes that they execute, where the outsourcing company’s revenue is dependent on the results of a process.
Some examples, if you have a calling process, your fee could depend on the sales that you manage, or based on collections that you would do etc. But that is not our focus here. We are talking of a billing process, where your client’s revenue is dependent on an outcome or an event. His billing will be done based on the same.
Let us assume that your client is an insurance company. They have executed a policy with a large company for its employees, where they share the claims with the client, and if the claims exceed a certain limit, your client will bill that company for the differential. That is an outcome based billing.
One point of distinction from stage based billing here is that stage based billing will have pre defined stages, and billing will happen based on various stages, where as in an outcome based billing, it may not be necessary that an outcome will actually get triggered. There is a contingent nature evident in this.
That will help you for sure in understanding this.
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