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What’s wrong with billable hours

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Re: What’s wrong with billable hours

#71

Post by dragonwriter »

jedberg wrote: post #67
rootusrootus wrote: post #31

Earlier quoted context omitted.

And not just anywhere in Nevada, but Incline Village. Pulled that up on Redfin and I can see why someone would be tempted to brag.

Incline Village is the closest you can be to the Bay Area and still live in Nevada. It's where a lot of tech folks go after they exit or if they get a remote gig because then they don't have to pay income tax, but are only a 3-4 hour drive to SF if they have to go in. It also has great schools. So you end up with a lot of moneyed California ex-pats there.

> Incline Village is the closest you can be to the Bay Area and still live in Nevada.

Factually, no, its not: Stateline, NV on the south shore of Lake Tahoe is 15 road miles closer than Incline Village on the north shore. About similar drive time, though.

Incline Village is swankier though.

Re: What’s wrong with billable hours

#72

Post by NoboruWataya »

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…

I think it's startup people, rather than software people. You don't see as much of this kind of discussion in other software developer forums.

Building and running a business is its own field of expertise. If you think software people talk a lot about it, you should hear your average MBA!

Re: What’s wrong with billable hours

#74

Post by jedberg »

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…

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 get me for at least eight hours each day for a week.

I also do by the project billing, where I estimate how much work something will be, and pay on milestones. That requires a lot of up front work defining the deliverables in a way that avoids scope creep, but I also build in an overhead for scope creep so that I can "comp" them some deliverables that weren't covered, and everyone is happy.

But the most important part is that the price is always agreed upon up front.

The biggest issue with hourly billing is that neither of us knows how much the contract is worth until afterwards.

Re: What’s wrong with billable hours

#75

Post by jedberg »

dragonwriter wrote: post #71
jedberg wrote: post #67

Earlier quoted context omitted.

Incline Village is the closest you can be to the Bay Area and still live in Nevada. It's where a lot of tech folks go after they exit or if they get a remote gig because then they don't have to pay income tax, but are only a 3-4 hour drive to SF if they have to go in. It also has great schools. So you end up with a lot of moneyed California ex-pats there.

> Incline Village is the closest you can be to the Bay Area and still live in Nevada. Factually, no, its not: Stateline, NV on the south shore of Lake Tahoe is 15 road miles closer than Incline Village on the north shore. About similar drive time, though. Incline Village is swankier though.

Not in the winter. 50 can get closed for days, 80 is always plowed.

Closest in terms of average time throughout the year.

Re: What’s wrong with billable hours

#76

Post by swader999 »

jedberg wrote: post #74
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…

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?

Re: What’s wrong with billable hours

#77

Post by FredPret »

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.

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 they’ll either do a shoddy job managing or have to hire a manager. This thing is already spiralling!

So now a consultant comes along. This person is an expert and has a track record. They are self-starting and self-managing. They can be brought on to get the job done and then they go away.

You can see that hiring such a consultant is not only far easier, faster, and likely to result in high quality, but very likely cheaper.

Re: What’s wrong with billable hours

#78

Post by swader999 »

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?

"The biggest issue with hourly billing is that neither of us knows how much the contract is worth until afterwards." You still don't with daily billing.

Re: What’s wrong with billable hours

#79

Post by jedberg »

swader999 wrote: post #78
swader999 wrote: post #76

Earlier quoted context omitted.

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?

"The biggest issue with hourly billing is that neither of us knows how much the contract is worth until afterwards." You still don't with daily billing.

I know with daily billing because they can only book me for a set of days in advance. It's not ongoing. We agree ahead of time on the specific days I will be there/available.

Re: What’s wrong with billable hours

#80

Post by ghaff »

Aurornis wrote: post #53
ddkto wrote: post #9

Professional business people are familiar with different business models, and when to apply them. For instance, hourly billing makes a lot of sense if the scope is vague - the client carries the scope risk. Fixed price is amazing when the client has a specific, measurable problem that they don’t know how to fix (but you do). You can solve it cheaply, get paid waaay more than hourly and have a happy client. Being a pr…

> Fixed price is amazing when the client has a specific, measurable problem that they don’t know how to fix (but you do). You can solve it cheaply, get paid waaay more than hourly and have a happy client. What about fixed price makes the client happy in this situation? It's definitely not the fact that the contractor billed "waaay more than hourly". The upside of fixed price is that it's more predictable and it align…

They got their problem solved for an agreed-upon price. What's not to like?

It's actually the parent that was taking the risk. As they said, it could have easily been some hairy problem that took forever to solve.

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