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> Don't charge by the hour This is bad advice. Charging for a full week will make you lose a lot of clients. In the case of software development: The client n

> Don't charge by the hour This is bad advice. Charging for a full week will make you lose a lot of clients. In the case of software development: The client never knows the full spec of the project and you'll have weeks were 10 hours is enough. Charging for those extra 30 hours is terrible deal for your client and he won't take it. What you should be careful about is how much you charge per hour. You may set different rates based on context like: for a full time project project you charge X, for future maintaining (which is on demand ) you charge 1.5 times X. Hourly also protects you agains scope creeping. Charging by the week/project/milestones requires a near full specification and it's done at an agency level where you've a team. I've been working hourly and I love it. You can try to spec out any project as much as you can, in the end you can't predict scope changes and/or unexpected problems: API is broken, missed an important email, build system is failing for no obvious reason, server went down, etc, etc. You have to figure out when charging by the hour/week/month/milestones is reasonable. Just because someone is making 120K a year in San Fran, doesn't mean you've to make the same amount while freelancing. It heavily swings from client to client.

deleted 8y ago
[deleted]
WestCoastJustin 8y ago
I would like to offer a different point of view here. Speaking as someone who has done consulting and owns a business. I would leave those hourly jobs for someone else. Focus on selling the result or business impact here. Frame and charge for it that way. You do not want to be some charge me by the hour consultant where they can just find someone cheaper, they will start to think of you like that, and will find someone else. Do not overcharge or be dishonest about it. But, what is this result worth to them? I'd think of it that way. I have seen people pay 250k for a months work. But, the impact was massive for the company. I am positive this is on the small side as you work up the food chain. There is some free work up front in scoping things out, but then I would sell time in blocks or packages, and do not really get into what you are charing by the hour. They must have some budget for this project, the timelines, a general scope, etc. Make your proposal around that in the context of the impact to the company. This depends on your field and clients too. But, I'd look to move as quickly as possible from hourly to package deal. There is risk but there is also big reward.
- mariopt 8y ago
  The article is about going solo. If someone pays you 250k for a simple project. Either you got a REALLY good deal or the project is complex and it will require you to hire people. On the latter it's not about solo anymore. > You do not want to be some charge me by the hour consultant where they can just find someone cheaper, they will start to think of you like that, and will find someone else. I can make the same argument about hiring someone else who charges less per week or full project. Simple. The amount you get payed is highly dependable on the client. For most freelancers, charging for a week is a terrible mistake unless you've a proven track record and some reputation. I'm assuming the vast majority of freelancer are software developers. The location has a major impact on how much you get payed. If you live in San Fran you can charge a lot because that place is terribly expensive. Don't forget Europe has good developers fluent in English. You'll face competition worldwide. Also, it's easier to hire someone by the hour. The client can quickly see if you work great together and even give you bigger projects. It takes some time to build reputation and trust with clients. > You do not have overcharge or be dishonest about it. From a moral point of view, hourly is fair.
  - WestCoastJustin 8y ago
    There are people in the ML fields right now getting those rates for 1-2 person shops. That is where I have seen this. It totally does depend on the field though. Look, I totally understand that you cannot walk off the street and get those rates for project. You need to work your way up, specialize, build a reputation, and cultivate the correct clients, etc. That is all I am trying to get at. My strategy would not be to charge by the hour after the initial stages. I was just trying to make the point that you can focus on the end results. But, different strokes for different folks. There is always multiple ways of going about things. The thread rpeden references is a really sound way to implementing this plan.
  - tonyedgecombe 8y ago
    >If someone pays you 250k for a simple project. Either you got a REALLY good deal or the project is complex and it will require you to hire people. On the latter it's not about solo anymore. Sometimes it's about the value you deliver. I'll never forget walking into a pharmaceutical and them telling me they were loosing a million pounds a week because they couldn't get their compliance documentation out of the door. They had been looking for a solution for months and been unable to find it.
samschooler 8y ago
Just like the sibling comment said. If you can charge it, and you are consistently getting clients at X/week. Why not charge that? Especially if you know you can produce quality work. Leave the smaller projects for others.
rpeden 8y ago
I believe you'll find that overall consensus on HN will strongly disagree with you on this point. Here's the post most people will direct you to for an explanation of why you'll want to avoid hourly billing, and how to get to a place where you don't need to bill hourly: https://news.ycombinator.com/item?id=4247615 https://news.ycombinator.com/item?id=4247615 For what it's worth - all of the people I know who have been able to do software-related consulting successfully over the long term don't bill hourly. They'd actually agree with you that having a minimum billable period of a week lots them lots of clients - but it lost them the clients that would try to nickel and dime them to death and complain about every invoice no matter low the hourly rate was. It sounds like your experience has been different though, so I'm happy to hear you've found something that works for you.
- hardwaresofton 8y ago
  One sticking point I rarely see discussed with the prevailing line of thinking (noted by tptacek, patio11 and others), is that a week is a measure of time. If that's true, there is only time-based billing, and project-based billing. I've done both types, and project-based billing has been much more dangerous for me due to the need to accurately scope (or eat costs), usually for a client that has no idea how difficult "simple" additions can be (and often when you yourself cannot). Software scoping is effectively impossible to do accurately, and I've found the only way to get close is when you have already built the system in question before (or better yet, have a codebase you can reuse to hit 90% of the features in the first ~week of "work"). Hourly billing (whether you roll it up into a day/week/month) provides a way to cover myself from bad estimation, but limits you to charging for time to build and screws up incentives. Project billing means I eat costs from bad estimation, but with the possibility of reward from over-estimation, along with the fact that you can charge for what the deliverable is worth (i.e. the value you deliver, not the time it took you to build the product). As far as weeding out clients who aren't serious -- you can do that with a high-enough hourly billing (and generally you can get a feel for this from the client themselves)... Could someone explain how I'm understanding the avoid-hourly-billing ideas wrong? It seems reasonable but it just doesn't seem to work for me in practice with the estimation thing, never mind the fact that clients need regular updates and rarely value good software development practices (so may seem like you've spent a week doing nothing if they can't immediately see the result/how it will save them time over the lifetime of the project). [EDIT] - Another thing that I've realized when I was last thinking about this that I didn't include was that as complexity unfolded (and I realized my estimation was wrong), I did not increase prices/communicate this effectively to the business -- maybe that's where I'm getting it wrong? It feels like it would chip away at client trust to do so. For those who are wondering what I actually do when I take projects on these days -- I just set a high hourly rate, possibly bundle it into weeks/months, and avoid project-based estimation because of the difficulty of scoping and the likelihood of scope changes. This also gives me an edge when the scope changes -- it's no longer "can this fit", and it's more "sure we can fit this in, it will take longer though".
taneq 8y ago
Start with hourly, move away from it as soon as you can workably do so.
hobofan 8y ago
To offer a counterpoint to the other commenters here: I charge hourly and I wouldn't trade it for the world (unless I change the general concept on how I want to freelance). When I freelance, I want freedom. For me that often means taking off the rest of the day spontaneously after lunch, or just ending the day early. When you are billing for a whole day/week that becomes much harder. I also don't bill per-project, unless I have the ability to bring a trusted project manager onto the project as well, to provide me with some security against mismanagement, for the usual reasons like scope creep. Charging hourly also makes it much easier to juggle multiple clients at the same time. For some reason, a meeting with all the stakeholders was set up on a day I am spending most of a day with another client? No problem, I just scoot right over, bill both client hourly accordingly, and nobody has any reason to complain. As for clients being more prone to haggling over invoices with hourly rates, I haven't had that happen to me yet (~20 clients in 2,5 years). On the contrary, for project-based billing, there is usually a lot of time spent(/wasted) up front negotiating over pricing. I always send over a timesheet with my invoice, and if I had to guess I would guess that none of my clients ever checked that. In the end, hourly billing gives me a much more relaxed life, a much more stable income stream, a much more stable growth in income, with far fewer headaches.
- ioddly 8y ago
  > When you are billing for a whole day/week that becomes much harder. Daily/weekly are billing increments, not working increments. I still track hours internally; I billed a client last year for "one day" of work that took me a week due to other commitments. Made it clear up front that I was pretty busy at the time. He had no issues with it.
  - hobofan 8y ago
    If you handle it like that (which is the same way I do it), it doesn't make much of a difference, if you bill hourly vs. daily, does it? The maximum of money your're going to lose out on, is the few hours of rounding up to a day, which with any significant client are going to be peanuts compared to the rest.
bermanoid 8y ago
There is almost no situation where it makes more sense to bill hourly instead of daily, unless you're really junior. And frankly, if they want you at all, they should be willing to go in for a week.
- mancerayder 8y ago
  I'm totally at odds here with this statement, repeated by others here in other words. Look - in some industries, working 10 or 11 hours is one 'day.' As an hourly consultant I'm hedged against this, which is super common in financial environments. Maybe the experience you guys have is in less stressful, less demanding worlds. Hourly is a hedge against exploitative clients.
  - dboreham 8y ago
    Agree. There's probably a reason why lawyers and accountants bill by the hour. FWIW I get the impression that the folks here holding their nose at the idea of billing by the hour, actually are billing by the hour, just in 40h quanta.
    - mancerayder 8y ago
      The problem with forums such as this is, while most of us are in a tech or related field, we're from all over the world, at all income levels, in all sorts of industries. I can tell you that NYC and London hourly contractors are more hedged against a terrible existence of 10+ hours a day, on average, than daily rate contractors. So much so that it's actively harder to find hourly than daily rates. Employers (or clients if we should call them this) aren't stupid, they're interested in maximizing cost/benefit. Let me add something else. It depends on seniority and connections. If you folks are very senior-level software or systems architects, known in the business world or Twitter or through established experience, you can 'set the tone' and of course it makes more sense to, as mentioned above, charge weekly versus daily versus hourly and so forth. In my industry (DevOps and Systems Infrastructure) it's incredibly elite to reach that level. I'd have to be blogging and doing presentations at tech conferences to be able to go to a Fortune 500 company and dictate project-level Scopes of Work. And perhaps one day I'll get to that! But my point is that this is an elite percentage of consultants.
vicbun 8y ago
I agree that clients normally don't know full spec because no one works on that. One way I find very helpful in mitigating this is by getting a prototype of system, a detailed prototype made which goes a long way to clarify specs for the client and help me understand the scope. I found transitioning to non hourly project billing extremely satisfying.
Aeolun 8y ago
I’m more of the opinion you’ll lose a lot of clients you do not want to have.
system2 8y ago
Not sure of your background but clearly you did not work with enough clients to understand hourly is painful, invoices never paid in time, and you will get micromanaged very quickly. Weekly makes the management forget about you, and also you will be automating the paying process while knowing you will have a fixed income for a certain time. Hourly = Inconsistency, unpaid invoices, constant arguments over hours.
- dboreham 8y ago
  Counterargument: charging per week risks questions about public holidays, long weekends, actual hours worked and so on. Not to say it isn't an appropriate workable arrangement in some cases. FWIW I don't understand why hourly billing risks unpaid invoices any more than weekly. In my experience clients will not pay any kind of invoice without discrimination.
- shkkmo 8y ago
  > clearly you did not work with enough clients to understand hourly is painful, invoices never paid in time, and you will get micromanaged very quickly. As a full-time solo web developer for the last 8 years, I disagree and find your comment distastefully dismissive. Hourly billing can provide flexibility, transparency and freedom. I have never had a problem getting paid for any of my hourly invoices and I have never had any arguments about my hours. Different companies, projects and developers have different desires, needs and dynamics. I totally buy that there are a large number of freelance developers who are billing hourly and would be better off switching to billing daily or weekly. However, to claim that billing hourly is never the right choice is idiotic and naive. Hourly, daily, weekly and per project billing all have their upsides and downsides and work better in some circumstances than others.
codazoda 8y ago
I never took an hourly contract and my customers didn't want hourly contracts. They wanted a total project cost or consistent monthly cost instead. I got almost every job I ever bid.
sacado2 8y ago
The usual advice is to charge per project. If you really want a time-based fee charge per day, that's a good compromise.

deleted 8y ago

[deleted]

WestCoastJustin 8y ago

I would like to offer a different point of view here. Speaking as someone who has done consulting and owns a business. I would leave those hourly jobs for someone else. Focus on selling the result or business impact here. Frame and charge for it that way. You do not want to be some charge me by the hour consultant where they can just find someone cheaper, they will start to think of you like that, and will find someone else. Do not overcharge or be dishonest about it. But, what is this result worth to them? I'd think of it that way. I have seen people pay 250k for a months work. But, the impact was massive for the company. I am positive this is on the small side as you work up the food chain. There is some free work up front in scoping things out, but then I would sell time in blocks or packages, and do not really get into what you are charing by the hour. They must have some budget for this project, the timelines, a general scope, etc. Make your proposal around that in the context of the impact to the company. This depends on your field and clients too. But, I'd look to move as quickly as possible from hourly to package deal. There is risk but there is also big reward.

mariopt 8y ago
The article is about going solo. If someone pays you 250k for a simple project. Either you got a REALLY good deal or the project is complex and it will require you to hire people. On the latter it's not about solo anymore. > You do not want to be some charge me by the hour consultant where they can just find someone cheaper, they will start to think of you like that, and will find someone else. I can make the same argument about hiring someone else who charges less per week or full project. Simple. The amount you get payed is highly dependable on the client. For most freelancers, charging for a week is a terrible mistake unless you've a proven track record and some reputation. I'm assuming the vast majority of freelancer are software developers. The location has a major impact on how much you get payed. If you live in San Fran you can charge a lot because that place is terribly expensive. Don't forget Europe has good developers fluent in English. You'll face competition worldwide. Also, it's easier to hire someone by the hour. The client can quickly see if you work great together and even give you bigger projects. It takes some time to build reputation and trust with clients. > You do not have overcharge or be dishonest about it. From a moral point of view, hourly is fair.
- WestCoastJustin 8y ago
  There are people in the ML fields right now getting those rates for 1-2 person shops. That is where I have seen this. It totally does depend on the field though. Look, I totally understand that you cannot walk off the street and get those rates for project. You need to work your way up, specialize, build a reputation, and cultivate the correct clients, etc. That is all I am trying to get at. My strategy would not be to charge by the hour after the initial stages. I was just trying to make the point that you can focus on the end results. But, different strokes for different folks. There is always multiple ways of going about things. The thread rpeden references is a really sound way to implementing this plan.
- tonyedgecombe 8y ago
  >If someone pays you 250k for a simple project. Either you got a REALLY good deal or the project is complex and it will require you to hire people. On the latter it's not about solo anymore. Sometimes it's about the value you deliver. I'll never forget walking into a pharmaceutical and them telling me they were loosing a million pounds a week because they couldn't get their compliance documentation out of the door. They had been looking for a solution for months and been unable to find it.

samschooler 8y ago

Just like the sibling comment said. If you can charge it, and you are consistently getting clients at X/week. Why not charge that? Especially if you know you can produce quality work. Leave the smaller projects for others.

rpeden 8y ago

I believe you'll find that overall consensus on HN will strongly disagree with you on this point. Here's the post most people will direct you to for an explanation of why you'll want to avoid hourly billing, and how to get to a place where you don't need to bill hourly: https://news.ycombinator.com/item?id=4247615 https://news.ycombinator.com/item?id=4247615 For what it's worth - all of the people I know who have been able to do software-related consulting successfully over the long term don't bill hourly. They'd actually agree with you that having a minimum billable period of a week lots them lots of clients - but it lost them the clients that would try to nickel and dime them to death and complain about every invoice no matter low the hourly rate was. It sounds like your experience has been different though, so I'm happy to hear you've found something that works for you.

hardwaresofton 8y ago
One sticking point I rarely see discussed with the prevailing line of thinking (noted by tptacek, patio11 and others), is that a week is a measure of time. If that's true, there is only time-based billing, and project-based billing. I've done both types, and project-based billing has been much more dangerous for me due to the need to accurately scope (or eat costs), usually for a client that has no idea how difficult "simple" additions can be (and often when you yourself cannot). Software scoping is effectively impossible to do accurately, and I've found the only way to get close is when you have already built the system in question before (or better yet, have a codebase you can reuse to hit 90% of the features in the first ~week of "work"). Hourly billing (whether you roll it up into a day/week/month) provides a way to cover myself from bad estimation, but limits you to charging for time to build and screws up incentives. Project billing means I eat costs from bad estimation, but with the possibility of reward from over-estimation, along with the fact that you can charge for what the deliverable is worth (i.e. the value you deliver, not the time it took you to build the product). As far as weeding out clients who aren't serious -- you can do that with a high-enough hourly billing (and generally you can get a feel for this from the client themselves)... Could someone explain how I'm understanding the avoid-hourly-billing ideas wrong? It seems reasonable but it just doesn't seem to work for me in practice with the estimation thing, never mind the fact that clients need regular updates and rarely value good software development practices (so may seem like you've spent a week doing nothing if they can't immediately see the result/how it will save them time over the lifetime of the project). [EDIT] - Another thing that I've realized when I was last thinking about this that I didn't include was that as complexity unfolded (and I realized my estimation was wrong), I did not increase prices/communicate this effectively to the business -- maybe that's where I'm getting it wrong? It feels like it would chip away at client trust to do so. For those who are wondering what I actually do when I take projects on these days -- I just set a high hourly rate, possibly bundle it into weeks/months, and avoid project-based estimation because of the difficulty of scoping and the likelihood of scope changes. This also gives me an edge when the scope changes -- it's no longer "can this fit", and it's more "sure we can fit this in, it will take longer though".

taneq 8y ago

Start with hourly, move away from it as soon as you can workably do so.

hobofan 8y ago

To offer a counterpoint to the other commenters here: I charge hourly and I wouldn't trade it for the world (unless I change the general concept on how I want to freelance). When I freelance, I want freedom. For me that often means taking off the rest of the day spontaneously after lunch, or just ending the day early. When you are billing for a whole day/week that becomes much harder. I also don't bill per-project, unless I have the ability to bring a trusted project manager onto the project as well, to provide me with some security against mismanagement, for the usual reasons like scope creep. Charging hourly also makes it much easier to juggle multiple clients at the same time. For some reason, a meeting with all the stakeholders was set up on a day I am spending most of a day with another client? No problem, I just scoot right over, bill both client hourly accordingly, and nobody has any reason to complain. As for clients being more prone to haggling over invoices with hourly rates, I haven't had that happen to me yet (~20 clients in 2,5 years). On the contrary, for project-based billing, there is usually a lot of time spent(/wasted) up front negotiating over pricing. I always send over a timesheet with my invoice, and if I had to guess I would guess that none of my clients ever checked that. In the end, hourly billing gives me a much more relaxed life, a much more stable income stream, a much more stable growth in income, with far fewer headaches.

ioddly 8y ago
> When you are billing for a whole day/week that becomes much harder. Daily/weekly are billing increments, not working increments. I still track hours internally; I billed a client last year for "one day" of work that took me a week due to other commitments. Made it clear up front that I was pretty busy at the time. He had no issues with it.
- hobofan 8y ago
  If you handle it like that (which is the same way I do it), it doesn't make much of a difference, if you bill hourly vs. daily, does it? The maximum of money your're going to lose out on, is the few hours of rounding up to a day, which with any significant client are going to be peanuts compared to the rest.

bermanoid 8y ago

There is almost no situation where it makes more sense to bill hourly instead of daily, unless you're really junior. And frankly, if they want you at all, they should be willing to go in for a week.

mancerayder 8y ago
I'm totally at odds here with this statement, repeated by others here in other words. Look - in some industries, working 10 or 11 hours is one 'day.' As an hourly consultant I'm hedged against this, which is super common in financial environments. Maybe the experience you guys have is in less stressful, less demanding worlds. Hourly is a hedge against exploitative clients.
- dboreham 8y ago
  Agree. There's probably a reason why lawyers and accountants bill by the hour. FWIW I get the impression that the folks here holding their nose at the idea of billing by the hour, actually are billing by the hour, just in 40h quanta.
  - mancerayder 8y ago
    The problem with forums such as this is, while most of us are in a tech or related field, we're from all over the world, at all income levels, in all sorts of industries. I can tell you that NYC and London hourly contractors are more hedged against a terrible existence of 10+ hours a day, on average, than daily rate contractors. So much so that it's actively harder to find hourly than daily rates. Employers (or clients if we should call them this) aren't stupid, they're interested in maximizing cost/benefit. Let me add something else. It depends on seniority and connections. If you folks are very senior-level software or systems architects, known in the business world or Twitter or through established experience, you can 'set the tone' and of course it makes more sense to, as mentioned above, charge weekly versus daily versus hourly and so forth. In my industry (DevOps and Systems Infrastructure) it's incredibly elite to reach that level. I'd have to be blogging and doing presentations at tech conferences to be able to go to a Fortune 500 company and dictate project-level Scopes of Work. And perhaps one day I'll get to that! But my point is that this is an elite percentage of consultants.

vicbun 8y ago

I agree that clients normally don't know full spec because no one works on that. One way I find very helpful in mitigating this is by getting a prototype of system, a detailed prototype made which goes a long way to clarify specs for the client and help me understand the scope. I found transitioning to non hourly project billing extremely satisfying.

Aeolun 8y ago

I’m more of the opinion you’ll lose a lot of clients you do not want to have.

system2 8y ago

Not sure of your background but clearly you did not work with enough clients to understand hourly is painful, invoices never paid in time, and you will get micromanaged very quickly. Weekly makes the management forget about you, and also you will be automating the paying process while knowing you will have a fixed income for a certain time. Hourly = Inconsistency, unpaid invoices, constant arguments over hours.

dboreham 8y ago
Counterargument: charging per week risks questions about public holidays, long weekends, actual hours worked and so on. Not to say it isn't an appropriate workable arrangement in some cases. FWIW I don't understand why hourly billing risks unpaid invoices any more than weekly. In my experience clients will not pay any kind of invoice without discrimination.
shkkmo 8y ago
> clearly you did not work with enough clients to understand hourly is painful, invoices never paid in time, and you will get micromanaged very quickly. As a full-time solo web developer for the last 8 years, I disagree and find your comment distastefully dismissive. Hourly billing can provide flexibility, transparency and freedom. I have never had a problem getting paid for any of my hourly invoices and I have never had any arguments about my hours. Different companies, projects and developers have different desires, needs and dynamics. I totally buy that there are a large number of freelance developers who are billing hourly and would be better off switching to billing daily or weekly. However, to claim that billing hourly is never the right choice is idiotic and naive. Hourly, daily, weekly and per project billing all have their upsides and downsides and work better in some circumstances than others.

codazoda 8y ago

I never took an hourly contract and my customers didn't want hourly contracts. They wanted a total project cost or consistent monthly cost instead. I got almost every job I ever bid.

sacado2 8y ago

The usual advice is to charge per project. If you really want a time-based fee charge per day, that's a good compromise.