What’s wrong with billable hours • Hacker News Board

Re: What’s wrong with billable hours

#81

Post by csa » Tue, Sep 05, 2023, 5:56 PM UTC

ryanjshaw wrote: post #24

ChristopherM wrote: post #15

I charge by the hour and will never change. It forces the customer to focus on getting the requirements right instead of hand waving it like "oh yeah, that's just what I want" and then come back later "I didn't want that, what I meant was" repeat ad infinitum. You see they are paying for my time, not results. If they choose to waste it... doesn't matter to me, it's all billable just the same. I will do my best to ste…

> This year I'm on track to bill out between $360k and $400k > To anyone reading this [post] and thinking they are offering you helpful advice, consider their motive Honestly I'd be happy to sign up to your newsletter and be upsold into a private $20/mo high-end consulting community forum if I were to learn how to earn those kind of numbers and I was disappointed you didn't.

> Honestly I'd be happy to sign up to your newsletter and be upsold into a private $20/mo high-end consulting community forum if I were to learn how to earn those kind of numbers

Based on communities I am aware of that basically do this…:

1. $20 a month might get you a community that is working to get to $100k. The biggest hurdle will be simply taking action, with the second hurdle of having that action be reasonable.

2. A $50-$100 a month community might get you into the solid $100k-$500k range. I think this is your target. Biggest hurdles will be structuring work and addressing low self-esteem issues (e.g., imposter syndrome). Lesser issues will be finding reliable sub-contractors and/or communities thereof.

3. $500-$700 a month gets you into a community of folks running businesses with $1 million ARR and higher (usually as CEO rather than sole proprietor). Biggest issues will be things like hiring (especially key CXX-type slots), info on lesser known/documented processes (typically easier once it has been done once), and info on broader issues (e.g., outsourcing to $COUNTRY, to-the-minute status of manufacturing in $COUNTRY, etc.).

The numbers can go higher.

All of the above will also have an element of sanity check (“is hiring really this tough right now?”) and commiseration (“omg, my sales guy has to have his emotional support emu next to him in every zoom call!”).

Re: What’s wrong with billable hours

#82

Post by ChristopherM » Tue, Sep 05, 2023, 5:56 PM UTC

hello_moto wrote: post #23

ChristopherM wrote: post #15

I charge by the hour and will never change. It forces the customer to focus on getting the requirements right instead of hand waving it like "oh yeah, that's just what I want" and then come back later "I didn't want that, what I meant was" repeat ad infinitum. You see they are paying for my time, not results. If they choose to waste it... doesn't matter to me, it's all billable just the same. I will do my best to ste…

I see that your niche is in C/C++ world (with some Obj-C), low-level stuff. Mind if I ask how's the market and what kind of clients (companies?) that you worked with? If you don't feel comfortable sharing the list, would you be able to share some hints? Out of curiosity because my background in college is more towards System programming but life puts me as a full-stack and backend/cloud engineering. Gettin a bit tire…

Most of my clients tend to be Medical Device startups, but I did have a really long relationship with a major food manufacturer. While it makes sense for them to hire full time software engineers for some of the work, they always have a hard time finding device driver experts. Also they tend to attract less experienced engineers, so having me on board helps to manage and mentor their team. And I'm generally the one laying out the architecture and breaking the project into smaller parts so their engineers can implement it.

If you want to break into consulting, you have to figure out which field you want to be in. I'd avoid anything that has a boot-camp available for it, that's a race to the bottom. Then you need to get at least 10 years experience working in the field, preferably at a variety of companies, and make friends and business contacts at each place.

Re: What’s wrong with billable hours

#83

Post by tptacek » Tue, Sep 05, 2023, 5:56 PM UTC

swader999 wrote: post #76

jedberg wrote: post #74

Earlier quoted context omitted.

More power to you, but I stopped charging by the hour a long time ago. I charge minimum by the day, and offer a discount if you buy a week. I still bill for my time, but I avoid haggling over how many hours something took, and it also saves me the trouble of tracking my hours. You book me for a day, you get me for the whole (at least) eight hour day, however you want to spend that time. You book me for the week, you…

How do you deal with clients that perceive and expect to have you available and working more than eight hours a day? What do you do about when your not immediately answering during lunch etc. What do you do about days where you detect l weren't fully engaged by the client for a full eight hours?

Don't set that expectation. Don't work with clients that expect you to track hours when you bill days. The threshold for productivity and exclusivity I've had has been "if I billed you for a day, I'm not going to bill work for anybody else in that day"; that's as far as I go. In 15 years of doing this kind of work ('05-'20) I never had a problem --- but we did bail on RFPs where clients made it clear they'd be looking over our shoulders to make sure we were busy. That happened only a couple times, and, in retrospect, based on conversations with the people who ultimately won those bids, we were always glad to have had the early warning on those clients.

Re: What’s wrong with billable hours

#84

Post by jedberg » Tue, Sep 05, 2023, 5:58 PM UTC

swader999 wrote: post #76

jedberg wrote: post #74

Earlier quoted context omitted.

More power to you, but I stopped charging by the hour a long time ago. I charge minimum by the day, and offer a discount if you buy a week. I still bill for my time, but I avoid haggling over how many hours something took, and it also saves me the trouble of tracking my hours. You book me for a day, you get me for the whole (at least) eight hour day, however you want to spend that time. You book me for the week, you…

How do you deal with clients that perceive and expect to have you available and working more than eight hours a day? What do you do about when your not immediately answering during lunch etc. What do you do about days where you detect l weren't fully engaged by the client for a full eight hours?

> How do you deal with clients that perceive and expect to have you available and working more than eight hours a day?

The contracts specifies which days I will be there/available, and the times (usually 9am to 4:30pm in their time zone). Sometimes if the work is interesting I'll give them extra hours on me.

> What do you do about when your not immediately answering during lunch etc.

I work through lunch. I always answer. I take care of my personal needs before and after the contract time. I build in 30 extra minutes to account for bathroom breaks and heating up food to eat.

> What do you do about days where you detect l weren't fully engaged by the client for a full eight hours?

That's a them problem. If they don't have enough work to fill my time, then that's on them. If they have enough work, then I do it. It's just my work ethic.

Re: What’s wrong with billable hours

#85

Post by ChristopherM » Tue, Sep 05, 2023, 5:58 PM UTC

the_lonely_road wrote: post #29

ChristopherM wrote: post #15

I charge by the hour and will never change. It forces the customer to focus on getting the requirements right instead of hand waving it like "oh yeah, that's just what I want" and then come back later "I didn't want that, what I meant was" repeat ad infinitum. You see they are paying for my time, not results. If they choose to waste it... doesn't matter to me, it's all billable just the same. I will do my best to ste…

I clicked on you because I was curious and noticed your bio says you live in Nevada still if you care.

I haven't made a post in years, I'll update my bio. I didn't realize it still pointed to Incline Village.

Re: What’s wrong with billable hours

#86

Post by tptacek » Tue, Sep 05, 2023, 5:58 PM UTC

FredPret wrote: post #77

ryanjshaw wrote: post #24

Earlier quoted context omitted.

> This year I'm on track to bill out between $360k and $400k > To anyone reading this [post] and thinking they are offering you helpful advice, consider their motive Honestly I'd be happy to sign up to your newsletter and be upsold into a private $20/mo high-end consulting community forum if I were to learn how to earn those kind of numbers and I was disappointed you didn't.

Consider a company that needs a programming job done. It’s maybe a one-off, perhaps a 3 month to 3 year project. The company is not in tech and has no programmers. Now, in this scenario they could hire a programmer at say, 100-200k, for the sake of argument. But this person might want to stay on for years, want benefits, and would need a manager. The company has no management experience in programming, so they know t…

Which makes it crazy to me that anybody thinks about delivering work metered in hours, as if they were a furniture mover. A contract developer is selling a (quite valuable) enterprise product. You don't need an MBA to know not to do cost-based pricing.

Re: What’s wrong with billable hours

#87

Post by vitaflo » Tue, Sep 05, 2023, 5:59 PM UTC

poulsbohemian wrote: post #35

ChristopherM wrote: post #15

I charge by the hour and will never change. It forces the customer to focus on getting the requirements right instead of hand waving it like "oh yeah, that's just what I want" and then come back later "I didn't want that, what I meant was" repeat ad infinitum. You see they are paying for my time, not results. If they choose to waste it... doesn't matter to me, it's all billable just the same. I will do my best to ste…

Here's the challenge I ran into, so I'm curious how you handle it... If you bill by the hour, first they fight you over the hourly rate. Then they want to argue over how many hours it will take to do the work. Then they want to argue over you billing them for all the project management and planning hours you are spending with them, they only want you to bill them for "the work." Then when they get the bill they want…

I've been a contractor for 14 years now and have faced little of what you describe, but I've also attempted to insulate myself from it as much as possible. You learn pretty quickly which clients not to take, and haggling over rate is the first red flag. My rate is my rate, it's not negotiable.

Other red flags are "we have a project starting in a week" type offers. Mom & Pop's are right out as they are the worst companies to deal with. Startups tend to be great since they have tons of money to throw around and don't care how it's spent as long as work gets done. And if it's not at least couple months worth of work it's not worth my time.

Once you have a network many of these issues go away. If someone is coming to you because they know you or you know someone on the team, they are much less likely to dick you around. It's also easier if you promote yourself as a consultant as much as a contractor because then all the "planning" hours are part of your offering (and I never use the term "freelancer" cuz I don't work for free).

The most powerful thing you can tell a client is "no". There will always be other clients, there's no reason to sell yourself short.

Re: What’s wrong with billable hours

#88

Post by jzb » Tue, Sep 05, 2023, 5:59 PM UTC

mk_stjames wrote: post #48

One thing I've noticed more now that I read HN more than other places... Software people sure like to talk/write a lot of about their business. Like, a lot. I'm a mechanical/aerospace engineer, and I've done some short term consulting for startups (but now mostly retired). There is verrry little online in the form of blog posts like this mulling over how people work in that type of engineering (especially in the high…

Corollary: Take a generalist observation about any type of creative work, stick "developer" somewhere in there, and act as if developers are unique and/or the observation is new.

Example: Not long ago I kept seeing some variation of articles about how meetings are bad for developers. Specifically developers.

Guess what? This is true for pretty much any creative type work like writing, design, or any type of work that involves deep thinking. But it was treated like a revelation because it was about developers and made no case for all the other workers in the same boat.

This piece? I could've written this 20 years ago as a freelance writer. Generally I refused to stick an hourly rate when dealing with clients for lots of reasons, not least of which that when I know a topic and it's in my wheelhouse I write very fast. (And if I struggle with a topic, it isn't on the client to pay for extra time...)

My dad could've written it 45 years ago as a sign painter and pinstriper. He charged by the job / value of the work delivered, not by how long it took to do. (Insert Picasso anecdote about "but that only took you 30 seconds," "yes, but it took me a lifetime to learn...")

At the time his craft was highly valued, hard to learn, and the difference between a good sign painter or pinstriper and a bad one was enormous. If there'd been a Hacker News for his field, maybe we'd have seen the same thing. Then came vinyl signs...

Re: What’s wrong with billable hours

#89

Post by tough » Tue, Sep 05, 2023, 5:59 PM UTC

user_named wrote: post #40

tetha wrote: post #36

Earlier quoted context omitted.

Game development adds another dimension. A musician I know helps small indie artists with music as a side business. His contract states a fixed number of hours producing the music and effects is free, until earning some 100k revenue / month, when it starts costing 0.1% of revenue royalties / month. He has fun with it, it's usually free, but if someone makes the new Minecraft with his music, he will get his share.

Good luck ever getting that share of revenue

Can't you just change the music in a silent update if the thing took off?

Re: What’s wrong with billable hours

#90

Post by tptacek » Tue, Sep 05, 2023, 6:01 PM UTC

ChristopherM wrote: post #69

ryanjshaw wrote: post #24

Earlier quoted context omitted.

> This year I'm on track to bill out between $360k and $400k > To anyone reading this [post] and thinking they are offering you helpful advice, consider their motive Honestly I'd be happy to sign up to your newsletter and be upsold into a private $20/mo high-end consulting community forum if I were to learn how to earn those kind of numbers and I was disappointed you didn't.

I started "programming" in 1982 on a VIC-20, I taught myself C++ in 1991 and programmed as a hobby until I switched majors in University. Then I moved from Job to Job once I stopped learning/progressing. Along the way I made many contacts at a diverse group of companies. I started at a medical device company reverse engineering MRI/CAT scan data for a 3D device used in brain surgery. Then I worked for a company that…

Given what you're working on and how close it comes to intersecting with the consulting work I've done ('05-'20) and the likely client overlap, and given the top-line dollars you said upthread you're bringing in, I'm going to go out on a limb here, way, way out, and say: you could double that effective bill rate, denominate it in days or weeks, and significantly increase the amount of money you make while working significantly fewer days every year.

I might be wrong about this, of course! But I'm not being casual about saying it.