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The billable hour is a trap into which more and more of us are falling

timharford.com

21–30 of 188 posts

Re: The billable hour is a trap into which more and more of us are falling

#21
Jonathan Stark is a thought leader / coach / writer / blogger etc that has been beating the drum on time-based pricing vs value-based pricing. He helps software engineers and others get off the time-based model and transition to value-based.

Here's his website: https://jonathanstark.com/

Here are some interviews where he covers the topic https://www.youtube.com/watch?v=UT32G9wmONg https://www.youtube.com/watch?v=B1b7QlQILRo

Re: The billable hour is a trap into which more and more of us are falling

#22
post #7
post #6

I've been paid high hourly wages to build software and you definitely start to look at every minute of non-billable time as, "I could have made X in these 3 hours I spent relaxing." Leads to overwork. There's a healthy balance but took me a while to find it.

Exactly in the same spot, I've recently gone freelance where I'm paid by the hour and I've yet to take a holiday cause I always think this week of holiday will cost me $$$ (huge amount of money compared to what a normal one week holiday would cost). Sadly, I will probably burnout soon and ignore that thought.

Start charging day, week and month rates, along with retainer rates. For projects and clients you're confident in satisfying, also consider fixed prices for deliverables, revenue sharing deals, etc.

Re: The billable hour is a trap into which more and more of us are falling

#23
I've been working as a freelancer for many years, billing hourly. I have absolutely no hesitation to take vacations. If anything, it makes me more likely to take a few more days off, since I don't feel bad about a client paying me for that time. I routinely take months-long sabbaticals between gigs, and use them to learn new things. I take extra long vacations over the winter holidays.

If someone is feeling an urgency to work more hours beyond what provides true value for their life, the problem isn't how one's invoices are arranged. The problem is one's attitude.

Re: The billable hour is a trap into which more and more of us are falling

#24
post #23

I've been working as a freelancer for many years, billing hourly. I have absolutely no hesitation to take vacations. If anything, it makes me more likely to take a few more days off, since I don't feel bad about a client paying me for that time. I routinely take months-long sabbaticals between gigs, and use them to learn new things. I take extra long vacations over the winter holidays. If someone is feeling an urgenc…

I agree but sometimes fear can play a role. What if the economy goes down? What if I can't find work?

It might be very hard to ignore the nagging danger of poverty especially if you are in America.

Re: The billable hour is a trap into which more and more of us are falling

#25

Jonathan Stark is a thought leader / coach / writer / blogger etc that has been beating the drum on time-based pricing vs value-based pricing. He helps software engineers and others get off the time-based model and transition to value-based. Here's his website: https://jonathanstark.com/ Here are some interviews where he covers the topic https://www.youtube.com/watch?v=UT32G9wmONg https://www.youtube.com/watch?v=B1b7…

I'm a big fan of Jonathan Stark. As well as value-pricing he has lots of great content on writing proposals, developing productised services, moving to advisory roles etc. He has two podcasts that are worth listening to, The Business of Authority [0] and Ditching Hourly [1]

[0] https://www.thebusinessofauthority.com/ [1] https://podcast.ditchinghourly.com/

Re: The billable hour is a trap into which more and more of us are falling

#26

Jonathan Stark is a thought leader / coach / writer / blogger etc that has been beating the drum on time-based pricing vs value-based pricing. He helps software engineers and others get off the time-based model and transition to value-based. Here's his website: https://jonathanstark.com/ Here are some interviews where he covers the topic https://www.youtube.com/watch?v=UT32G9wmONg https://www.youtube.com/watch?v=B1b7…

My side gig is that I have a few clients who pay me $1K a month for 10 hours of retainer. Most months, I barely put in 3 hours. A few, I might work 12 and I don't charge them because everyone's happy. They realize I have a day job and as such, I'm not going to be immediately available unless I can take a lunch break. A win for everyone.

Re: The billable hour is a trap into which more and more of us are falling

#27
Another downside of the billable hour: it encourages perverse incentives. I was recently talking with a potential customer in the legal field, and he was interested in my startup's software, which helps people read on screen more quickly/easily. But at one point he turned to me and said "I know one of the senior lawyers is going to ask me if using your software is going to cause the billable volume to go down for their associates. I know that sounds like a silly question, but how should I answer?"

In short, efficiency is discouraged when dollars are on the line.

Re: The billable hour is a trap into which more and more of us are falling

#28
As a couterpoint, I've never been happier than at my current role where I'm expected to put in 40 hours per week, and not a minute more. Sure I do timesheets, but they cap at 40 hours.

Prior jobs always had the implicit expectation that I could be working a little harder, or clocking off early on a Friday was evil. Now, 40 hours a week can be done any time, and that flexibility is hugely liberating. I honestly think they get more out of me as well.

Re: The billable hour is a trap into which more and more of us are falling

#29
post #7
post #6

I've been paid high hourly wages to build software and you definitely start to look at every minute of non-billable time as, "I could have made X in these 3 hours I spent relaxing." Leads to overwork. There's a healthy balance but took me a while to find it.

Exactly in the same spot, I've recently gone freelance where I'm paid by the hour and I've yet to take a holiday cause I always think this week of holiday will cost me $$$ (huge amount of money compared to what a normal one week holiday would cost). Sadly, I will probably burnout soon and ignore that thought.

> I've yet to take a holiday cause I always think this week of holiday will cost me $$$

I'm a long-time hourly freelancer, and it's absolutely true - the lack of revenue for that period will indeed cost you money. But not taking the holiday will cost you a vacation. I personally think about the value lost from not working, and the value gained from the vacation, and usually conclude that taking the vacation is the clear winner. It's all about establishing a proper value system and being honest with yourself about it.

Re: The billable hour is a trap into which more and more of us are falling

#30
post #23

I've been working as a freelancer for many years, billing hourly. I have absolutely no hesitation to take vacations. If anything, it makes me more likely to take a few more days off, since I don't feel bad about a client paying me for that time. I routinely take months-long sabbaticals between gigs, and use them to learn new things. I take extra long vacations over the winter holidays. If someone is feeling an urgenc…

I agree but sometimes fear can play a role. What if the economy goes down? What if I can't find work? It might be very hard to ignore the nagging danger of poverty especially if you are in America.

You need to include all that risk in your hourly rate, otherwise you're being severely underpaid.
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