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

timharford.com

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

#61

Post by Wowfunhappy »

Traubenfuchs wrote: post #38
gnicholas wrote: post #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 the…

He is clearly not very good with that billable hour craze. By doubling efficiancy you can sell the same hour to two customers. This is normal and encouraged in law and the consulting world.

It is?! Couldn't this also be considered fraud?

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

#62

Post by codefreeordie »

tomatowurst wrote: post #13

Does anybody make $1000 USD / hr? What is your day to day like? How many clients do you have and how many hours do you bill per year? Do you actually work 2087 hours per year which would net you $2MM/year? I'm curious how some people are able to bill such high amounts and how they got started. It must also be extra stressful since its not like you are working for a company either so you need to do marketing and find…

That last part is actually the reason why hourly rates tend to be so high. You can't bill all the hours.

A common rule of thumb for setting a billable rate is 3x to 4x the hourly-equivalent salary. If you are currently making $200k/yr working a full-time gig with good benefits, then your hourly-equivalent salary is $100, and you should bill hours out at around $300/hr to $400/hr on a billable-hour basis.

So, you should figure that someone who would earn a TC of around $500k-650k/yr would be billed out at around $1,000/hr

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

#63

Post by analog31 »

huitzitziltzin wrote: post #51

One potential advantage of the billable hour: My wife works for a company which provides consulting and evaluation services to states and the federal government. Project budgets are fixed and every employee's time must be accounted for precisely. My wife's time is expensive. What this means it that there are many project meetings to which she is deliberately not invited b/c her time is too expensive to be spent in a…

Oddly enough I've been on the other side of this:

Multiple IC's brought together in a meeting, to prepare for the meeting with the contractor, "to avoid wasting the contractor's expensive time." Writing and reviewing a statement of work for the contractor in excruciating detail, when an IC doing the same work would just figure out what was needed.

I made a mental note of what skills were so much more valuable than mine. Now I have those skills.

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

#64

Post by resoluteteeth »

me_me_mu_mu wrote: post #44
gnicholas wrote: post #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 the…

Low key hope in my life time I can see lawyers and other secretary tier professions disappear in favor of open source systems. The only time you’d need a lawyer will be in criminal court otherwise you don’t need to pay someone in six figure debt 800/hr to proof read something. Maybe I’m wrong but I would rather eat dirt than spend time/money on lawyers and other secretary tier professionals who ultimately still make…

Is software development also a secretary tier profession?

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

#65

Post by mensetmanusman »

InefficientRed wrote: post #10
RcouF1uZ4gsC wrote: post #2

> But I don’t think I’m over-romanticising to suggest that just as there is something psychologically corrosive about the fact that the lawyer can always bill another six minutes, there is something psychologically healthy about the fact that the farmer can sometimes rest assured that there is nothing useful to be done until the morning. This sense of a “forced” break from work, reminds me of the Jewish concept of th…

The loss of the sabbath in Christianity really puts a limelight on the dark side of grace. Rest is for eternity; clock back in.

Christianity hasn’t lost the sabbath, the idea of the sabbath got steamrolled by a consumerist culture.

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

#66

Post by l33t2328 »

analog31 wrote: post #63
huitzitziltzin wrote: post #51

One potential advantage of the billable hour: My wife works for a company which provides consulting and evaluation services to states and the federal government. Project budgets are fixed and every employee's time must be accounted for precisely. My wife's time is expensive. What this means it that there are many project meetings to which she is deliberately not invited b/c her time is too expensive to be spent in a…

Oddly enough I've been on the other side of this: Multiple IC's brought together in a meeting, to prepare for the meeting with the contractor, "to avoid wasting the contractor's expensive time." Writing and reviewing a statement of work for the contractor in excruciating detail, when an IC doing the same work would just figure out what was needed. I made a mental note of what skills were so much more valuable than mi…

What skills were they?

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

#67

Post by kache_ »

The high rolling software contractors I know use "billable hours" as a random meter stick to charge whatever they feel like. I know a guy who has more billable hours than waking hours across the week across three contracts. The customers know and don't care, because he gets things done. I've even heard people complain about clients over beers and say "because they were being so stupid I added 8 billable hours"

charge what you want. Billable hours are to make the departments approving the spend feel comfortable. What are they going to do? Find someone else who can build a complex OLTP system in 2 months?

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

#68

Post by victor9000 »

Traubenfuchs wrote: post #40
Wowfunhappy wrote: post #37

Earlier quoted context omitted.

What was your advice on how to answer?

„By doubling the efficiancy, you can use this to sell 16 billable hours per 8 hours of work.“

Or you could double your client count and avoid committing fraud.

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

#69

Post by SkyPuncher »

gamblor956 wrote: post #60
executive wrote: post #18

Earlier quoted context omitted.

More like bill one client $1000/hr for travel and work on another client's $1000/hr case during the trip. /nojoke

That is fraud, and if you get caught you would be looking at prison time. And in the case of the legal and accounting professions, doing this will get your license revoked.

It's inconclusive if it's fraud without knowing contract details.

If you're being paid simply to travel, then it is not fraudulent to also work on another client. If your being paid to travel _and_ focus on that client, then it would be fraudulent to work on another client.

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

#70

Post by weq »

gnicholas wrote: post #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 the…

I was in a lawtech startup and this is the EXTACT reason why i left and the reason why its hocky-stick never evolved. Sure they have customers, but they cant retain or grow.

Lawyers get paid less the more efficent things are. Thats not a thing they desire, nore incentivize. Eventually they will come, kicking and screaming, but dont hold your breath.

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