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Hourly is unprofessional and a conflict of interest with your client. The worst deal I would sign is a day rate (no logging hours) but fixed scope/duration is

Hourly is unprofessional and a conflict of interest with your client. The worst deal I would sign is a day rate (no logging hours) but fixed scope/duration is far better.

ghaff 5y ago
It really depends. In general I prefer charging by the task but that assumes a well-scoped and predictable task. That works for some things and not for others. Of course, there are a number of professions (law, accounting, etc.) where hourly charges are absolutely the norm. I've done some legal work and it was in some ways very nice to get paid whenever you were "on the clock."
- eatYourFood 5y ago
  I agree with Alan Weiss, lawyers are unprofessional and mostly terrible at maximising income. They charge 1:1 hours to fees which is a bad deal for a professional.
  - ghaff 5y ago
    The legal work I did was for an expert witness case as a subject matter expert (not a lawyer). There is no way we could have/would have agreed to a fixed fee up front unless it was for a really outrageous amount. (Well, it ended up being a pretty outrageous amount anyway but there's no way we could have reasonably scoped the work.) Most of the work we did in general was for specifically scoped deliverables and we actually tried very hard not to do day rates, much less hourly rates, but this was one case it really wasn't avoidable--and, of course, was the way the white shoe law firm operated.
    - eatYourFood 5y ago
      Lawyers are mostly pretty bad at pricing, let’s not use them as a benchmark for our industry. But yes, you did some law work and they want you to charge hourly rather than based on value.
      - ghaff 5y ago
        The point is that we would have had no way of pricing "value" up-front. It wasn't our primary business (which we mostly did price based on value). So charging $500/hour (or whatever it ended up being) made a lot more sense for everyone than just throwing a $100K invoice out there when we really didn't have any idea what sort of time commitment we were looking at.
wpietri 5y ago
As a blanket statement, I think that's ridiculous. Hourly is a good choice for contracts where they are looking to buy labor. Which is a common model, because they often see contract labor as a substitute for employee labor. The other models you mention can be much better, but also require the contractor to have both particular skills and enough relationship power to make them work. I have seen well-meaning developers absolutely get screwed on fixed scope contracts. And I've also seen less-well-meaning developers absolutely screw their clients on fixed price contracts. This is an area where blanket statements are harmful.
- eatYourFood 5y ago
  You can’t do hourly in London, the lowest you can go is a day rate, hours being 1:1 with fees is a great way to leave money on the table as a contractor. As a contractor you want to structure your deliverables on your terms so you can choose how the spend your time. Alan Weiss wrote a lot about this and his writings changed my life. Also, if you’re hourly in London you can’t claim to be independent and you’ll get smashed on tax as HMRC will treat you as a perm employee because your client controls your hours and activities. How do clients get screwed with fixed fee? Clients should pay for value, not hours sat in a chair.
  - rileymat2 5y ago
    > Clients should pay for value, not hours sat in a chair. I think the implication is that if one party is capturing the excess value produced disproportionately, that is screwing the other side. Particularly if this occurs because of information that is asymmetric in negotiation.
    - eatYourFood 5y ago
      If that’s the case, getting screwed is pretty common. If my SAP implementation is going to save over 1 million per year in increased manufacturing efficiency, how should I price my services? The floor is set by the cheapest contractors in my market, the ceiling is how ever high I can negotiate. The client will capture far more value than me over the lifetime of the product. I also don’t want to charge by the hour because there’s a conflict of interest and I want to detach hours worked from fees charged otherwise I’m just slaving away. Hourly is for blue collar work, it’s not professional at my and your level.

Hourly is unprofessional and a conflict of interest with your client. The worst deal I would sign is a day rate (no logging hours) but fixed scope/duration is far better.

ghaff 5y ago

It really depends. In general I prefer charging by the task but that assumes a well-scoped and predictable task. That works for some things and not for others. Of course, there are a number of professions (law, accounting, etc.) where hourly charges are absolutely the norm. I've done some legal work and it was in some ways very nice to get paid whenever you were "on the clock."

eatYourFood 5y ago
I agree with Alan Weiss, lawyers are unprofessional and mostly terrible at maximising income. They charge 1:1 hours to fees which is a bad deal for a professional.
- ghaff 5y ago
  The legal work I did was for an expert witness case as a subject matter expert (not a lawyer). There is no way we could have/would have agreed to a fixed fee up front unless it was for a really outrageous amount. (Well, it ended up being a pretty outrageous amount anyway but there's no way we could have reasonably scoped the work.) Most of the work we did in general was for specifically scoped deliverables and we actually tried very hard not to do day rates, much less hourly rates, but this was one case it really wasn't avoidable--and, of course, was the way the white shoe law firm operated.
  - eatYourFood 5y ago
    Lawyers are mostly pretty bad at pricing, let’s not use them as a benchmark for our industry. But yes, you did some law work and they want you to charge hourly rather than based on value.
    - ghaff 5y ago
      The point is that we would have had no way of pricing "value" up-front. It wasn't our primary business (which we mostly did price based on value). So charging $500/hour (or whatever it ended up being) made a lot more sense for everyone than just throwing a $100K invoice out there when we really didn't have any idea what sort of time commitment we were looking at.

wpietri 5y ago

As a blanket statement, I think that's ridiculous. Hourly is a good choice for contracts where they are looking to buy labor. Which is a common model, because they often see contract labor as a substitute for employee labor. The other models you mention can be much better, but also require the contractor to have both particular skills and enough relationship power to make them work. I have seen well-meaning developers absolutely get screwed on fixed scope contracts. And I've also seen less-well-meaning developers absolutely screw their clients on fixed price contracts. This is an area where blanket statements are harmful.

eatYourFood 5y ago
You can’t do hourly in London, the lowest you can go is a day rate, hours being 1:1 with fees is a great way to leave money on the table as a contractor. As a contractor you want to structure your deliverables on your terms so you can choose how the spend your time. Alan Weiss wrote a lot about this and his writings changed my life. Also, if you’re hourly in London you can’t claim to be independent and you’ll get smashed on tax as HMRC will treat you as a perm employee because your client controls your hours and activities. How do clients get screwed with fixed fee? Clients should pay for value, not hours sat in a chair.
- rileymat2 5y ago
  > Clients should pay for value, not hours sat in a chair. I think the implication is that if one party is capturing the excess value produced disproportionately, that is screwing the other side. Particularly if this occurs because of information that is asymmetric in negotiation.
  - eatYourFood 5y ago
    If that’s the case, getting screwed is pretty common. If my SAP implementation is going to save over 1 million per year in increased manufacturing efficiency, how should I price my services? The floor is set by the cheapest contractors in my market, the ceiling is how ever high I can negotiate. The client will capture far more value than me over the lifetime of the product. I also don’t want to charge by the hour because there’s a conflict of interest and I want to detach hours worked from fees charged otherwise I’m just slaving away. Hourly is for blue collar work, it’s not professional at my and your level.