What method of compensation may involve variable costs based on project engagement results?

Value-based pricing is a method of compensation where the fee is aligned with the value delivered to the client rather than the cost of the services provided or the time spent on a project. This approach allows for variable costs that can fluctuate based on the results achieved from the project engagement. For example, if a project leads to significant savings, growth, or other measurable outcomes for the client, the fees can be adjusted upward to reflect that success.

In value-based pricing, the focus is shifted from standard hourly rates or fixed fees to a model where compensation is directly linked to the effectiveness and impact of the work performed. This makes it a powerful incentive for both parties, as clients pay based on the results that matter most to them, and providers are motivated to deliver high-quality results.

Other methods, such as time-based fees or per diem arrangements, typically involve fixed charges that do not change with project results, thus lacking the inherent variability intended in the question. Professional fee plus expenses also tends to be more predictable, often reflecting a standard rate regardless of the project's outcomes. Therefore, value-based pricing stands out as the method capable of incorporating variable costs based on project results.