6 ms·

And as a freelancer, I will never take fixed-price contracts. Find someone else for this hell.

seanwilson 6y ago
> And as a freelancer, I will never take fixed-price contracts. Find someone else for this hell. Can you explain why you think this? Courses/books on freelancing I've looked at generally strongly advise getting away from hourly, so it's interesting how both extremes of this advice exist. My hypothesis is a lot of freelancers get burned on their first projects because there's a learning curving in controlling scope creep, charging enough, identify client red flags, not haven't enough potential clients to be picky etc. and react by switching to hourly only.
- EugeneOZ 6y ago
  My first project was 16 years ago. I’ve switched to freelance 8 years ago. So your assumption that I’m just a crying kid who can not manage his time is offensive. I’ll give you a hint: think how a client can abuse this.
- tluyben2 6y ago
  Hourly works really well if you do the admin in enough detail. Try to agree, on paper, about number of hours per period as you can. And that then actually makes it into 'sprints' of fixed price. I used to send over an email at least weekly with; 'X is going to take me at least 35 hours, are you ok with that?'. Of course X has to be small enough to not overshoot by a massive amount of hours and also you cannot trigger the 'at least' too often. Outside that, it works well, as there is a trace of agreed-upon hours, which helped me a lot when going over 'fulltime'. If the client asked me why 'I charged too much', I simply showed them the emails they agreed to, tallying up to 90 hours instead of 40 I would charge under the contract. But yeah, this 'screen monitoring' definitely doesn't work for me, so I would never agree to it; in that case fixed price is simpler.
  - seanwilson 6y ago
    I'm not completely against hourly and what you describe sounds decent as long as the client has a realistic budget and is reasonable about estimates. It's hard to do fixed price when there's a lot of unknowns or there's an unpredictable workload for example. I see people mention day and week rates as well, but this forces you to work in minimum increments which is less flexible. I just can't stand getting into scenarios where you start considering eating hours from your timesheet so the client doesn't get annoyed e.g. because you didn't feel you were being 100% productive for whatever reason, you got sidetracked by a hard to explain/justify bug, you went for a walk to think about a problem, you're going over budget, you think because you had to learn something new you shouldn't charge for the time, because part of a meeting included some casual chat. It's a lot of stress to the client too having to keep track of unpredictable costs. There's such a different feeling to working where you're not having to keep an eye on the clock having thoughts like "that's 30 minutes up already, I better find a solution to this soon or my timesheet will look bad". Fixed price lets you just get on with things and focus on actually being efficient instead of worrying about how efficient you're looking.
    - sitkack 6y ago
      Both strategies are useful. I would be interested to hear what the audience and author were in your statement about "getting away from hourly". Was that in recommendation adding business value and not being hourly labor or something else? I see fixed price being more of a tool in design projects, where the goal might be concrete but the path to get there is open, or the client wants a basket of options. Where as doing an n-party integration between multiple inflight projects at a fixed price would be poor idea, UNLESS, UNLESS the fixed price is some high multiple of the P99 and some low multiple of the P99.9bar In the first case, the value is in the answer, not the difficulty in which it was arrived at. In the second case, the actual work is what is needed and being paid for. But at a high enough level, all contracts are fixed price.
      - seanwilson 6y ago
        > Was that in recommendation adding business value and not being hourly labor or something else? A combination usually, with benefits to the client too: - Client + contractor aren't both wasting time with micromanagement that could be put into adding business value instead. - Contractor is incentivised to work smarter, finish tasks quicker and keep the business goal in mind. - Client can budget because they know the final price. - Contractor is happier and less stressed because they're not being micromanaged. These are all flipped with hourly. Fixed price will be horrible for the contractor if they're not charging enough and controlling scope creep though, but with hourly the client is taking the business risk instead.
- jcims 6y ago
  I’m out of that game but for me it depended on the work. I mostly did security assessments, which were extremely simple to time box and were much easier to sell as fixed bid. Longer architecture or implementation work were hourly.
- detaro 6y ago
  Recommend getting away from hourly, or recommend going for fixed-price only?
  - seanwilson 6y ago
    The general recommendation to earn more and not be micromanaged is to go fixed or value priced. Hourly puts a hard cap on your maximum earnings because there's only so many hours in the day and you'll earn less for finishing faster (e.g when reusing code or expertise from previous projects).
- OJFord 6y ago
  Not GP but presumably because of scope creep, disagreement about what the original extent was to be that was paid for all in one. I've seen that recommendation to 'get away from hourly' a lot too (I don't freelance) but I think that means (certainly doesn't have to mean) get away from charging for time entirely. Many professions (e.g. architects, solicitors, accountants, tax advisors) charge for time. I think the suggestion is usually to move from hourly to daily/weekly, some larger unit of time that's a more appropriate block for building software, allowing that 'thinking time' where you sort of did something else ('afk') but were working, since it's just part of the day.
- atleta 6y ago
  I guess we're talking about software development. Because it depends a lot on the kind of the job (or maybe I'm just ignorant and someone else's job seems simpler ;) ). But if we talk about software only, then estimating is hard, creating a strong and stable enough specification (that can be used for estimation) is hard, you have to sell it to the client - most clients are not willing to pay for it, for they don't understand that it would be needed in order to come up with a fixed cost. Even if they do understand the need and acknowledge the effort, they might say that if you create the spec and they don't like the final quote then the spec may not be valuable for them, because the next freelancer/company may not find it useful. (And it has some merit, though there are a lot of freelancers and companies who are willing to work and quote based on an existing detailed specification.) And if you do the estimation (and create the quote) without quoting for the specification work then you'll put in a lot of uncompensated hours which you'll have to make up for with the paying clients, so you'll be more expensive. Especially if you find a client who shops around for quotes, plays the "lets do a spec" game (for which they don't pay), and then go with the specification (or even just the improved understanding) to the next few companies where they can provide a detailed spec so those companies can quote lower. Oh, well and the client will compare the price tags (obviously and rightly so), so they will more likely to be choosing the offer that has the larger estimation error (as long as it's an underestimation, of course). And you can say that competition takes care of this (whoever is constantly underestimating, that constant underestimation will actually be their real price), but the above points still hold. It's just not worth it. Definitely not worth it if you don't have the client paying for the specification/planning that's needed for the quote.
  - seanwilson 6y ago
    On the other side, if you ask a lot of good questions and give a quote that's within budget, the client is going to be suspicious of another quote where similar insightful questions weren't asked first. If another quote is very cheap, the client will probably question if that's going to reflect the quality of the work. There's also risk that the developer they take the requirements + design doesn't really understand what they're getting into and can't execute. I don't think there's any easy answers, but generally you want to work on attracting clients that are more interested in high quality work over the cheapest price where shopping around like this isn't a good use of their time. Chatting about rough budgets first and making sure the client is going to profit from the work helps too. It's great when you get to charge for the planning phase though because you're not feeling rushed into committing to a quote with too many unknowns that might not really solve their problem. If you explain why it's risky to quote with so little information, some clients will listen and aren't going to go with someone asking nothing and offering a cheap price.
indymike 6y ago
I made a ton of money from fixed price contracts. Estimated at $100/HR average real hourly was $150/HR. You can't be constantly up against unknowns and you have to have a predictable cadence. If you stay focussed and can reuse deliverables it really helps. I did digital marketing so lots of landing pages and integration with crm and email marketing.

> And as a freelancer, I will never take fixed-price contracts. Find someone else for this hell. Can you explain why you think this? Courses/books on freelancing I've looked at generally strongly advise getting away from hourly, so it's interesting how both extremes of this advice exist. My hypothesis is a lot of freelancers get burned on their first projects because there's a learning curving in controlling scope creep, charging enough, identify client red flags, not haven't enough potential clients to be picky etc. and react by switching to hourly only.

EugeneOZ 6y ago
My first project was 16 years ago. I’ve switched to freelance 8 years ago. So your assumption that I’m just a crying kid who can not manage his time is offensive. I’ll give you a hint: think how a client can abuse this.
tluyben2 6y ago
Hourly works really well if you do the admin in enough detail. Try to agree, on paper, about number of hours per period as you can. And that then actually makes it into 'sprints' of fixed price. I used to send over an email at least weekly with; 'X is going to take me at least 35 hours, are you ok with that?'. Of course X has to be small enough to not overshoot by a massive amount of hours and also you cannot trigger the 'at least' too often. Outside that, it works well, as there is a trace of agreed-upon hours, which helped me a lot when going over 'fulltime'. If the client asked me why 'I charged too much', I simply showed them the emails they agreed to, tallying up to 90 hours instead of 40 I would charge under the contract. But yeah, this 'screen monitoring' definitely doesn't work for me, so I would never agree to it; in that case fixed price is simpler.
- seanwilson 6y ago
  I'm not completely against hourly and what you describe sounds decent as long as the client has a realistic budget and is reasonable about estimates. It's hard to do fixed price when there's a lot of unknowns or there's an unpredictable workload for example. I see people mention day and week rates as well, but this forces you to work in minimum increments which is less flexible. I just can't stand getting into scenarios where you start considering eating hours from your timesheet so the client doesn't get annoyed e.g. because you didn't feel you were being 100% productive for whatever reason, you got sidetracked by a hard to explain/justify bug, you went for a walk to think about a problem, you're going over budget, you think because you had to learn something new you shouldn't charge for the time, because part of a meeting included some casual chat. It's a lot of stress to the client too having to keep track of unpredictable costs. There's such a different feeling to working where you're not having to keep an eye on the clock having thoughts like "that's 30 minutes up already, I better find a solution to this soon or my timesheet will look bad". Fixed price lets you just get on with things and focus on actually being efficient instead of worrying about how efficient you're looking.
  - sitkack 6y ago
    Both strategies are useful. I would be interested to hear what the audience and author were in your statement about "getting away from hourly". Was that in recommendation adding business value and not being hourly labor or something else? I see fixed price being more of a tool in design projects, where the goal might be concrete but the path to get there is open, or the client wants a basket of options. Where as doing an n-party integration between multiple inflight projects at a fixed price would be poor idea, UNLESS, UNLESS the fixed price is some high multiple of the P99 and some low multiple of the P99.9bar In the first case, the value is in the answer, not the difficulty in which it was arrived at. In the second case, the actual work is what is needed and being paid for. But at a high enough level, all contracts are fixed price.
    - seanwilson 6y ago
      > Was that in recommendation adding business value and not being hourly labor or something else? A combination usually, with benefits to the client too: - Client + contractor aren't both wasting time with micromanagement that could be put into adding business value instead. - Contractor is incentivised to work smarter, finish tasks quicker and keep the business goal in mind. - Client can budget because they know the final price. - Contractor is happier and less stressed because they're not being micromanaged. These are all flipped with hourly. Fixed price will be horrible for the contractor if they're not charging enough and controlling scope creep though, but with hourly the client is taking the business risk instead.
jcims 6y ago
I’m out of that game but for me it depended on the work. I mostly did security assessments, which were extremely simple to time box and were much easier to sell as fixed bid. Longer architecture or implementation work were hourly.
detaro 6y ago
Recommend getting away from hourly, or recommend going for fixed-price only?
- seanwilson 6y ago
  The general recommendation to earn more and not be micromanaged is to go fixed or value priced. Hourly puts a hard cap on your maximum earnings because there's only so many hours in the day and you'll earn less for finishing faster (e.g when reusing code or expertise from previous projects).
OJFord 6y ago
Not GP but presumably because of scope creep, disagreement about what the original extent was to be that was paid for all in one. I've seen that recommendation to 'get away from hourly' a lot too (I don't freelance) but I think that means (certainly doesn't have to mean) get away from charging for time entirely. Many professions (e.g. architects, solicitors, accountants, tax advisors) charge for time. I think the suggestion is usually to move from hourly to daily/weekly, some larger unit of time that's a more appropriate block for building software, allowing that 'thinking time' where you sort of did something else ('afk') but were working, since it's just part of the day.
atleta 6y ago
I guess we're talking about software development. Because it depends a lot on the kind of the job (or maybe I'm just ignorant and someone else's job seems simpler ;) ). But if we talk about software only, then estimating is hard, creating a strong and stable enough specification (that can be used for estimation) is hard, you have to sell it to the client - most clients are not willing to pay for it, for they don't understand that it would be needed in order to come up with a fixed cost. Even if they do understand the need and acknowledge the effort, they might say that if you create the spec and they don't like the final quote then the spec may not be valuable for them, because the next freelancer/company may not find it useful. (And it has some merit, though there are a lot of freelancers and companies who are willing to work and quote based on an existing detailed specification.) And if you do the estimation (and create the quote) without quoting for the specification work then you'll put in a lot of uncompensated hours which you'll have to make up for with the paying clients, so you'll be more expensive. Especially if you find a client who shops around for quotes, plays the "lets do a spec" game (for which they don't pay), and then go with the specification (or even just the improved understanding) to the next few companies where they can provide a detailed spec so those companies can quote lower. Oh, well and the client will compare the price tags (obviously and rightly so), so they will more likely to be choosing the offer that has the larger estimation error (as long as it's an underestimation, of course). And you can say that competition takes care of this (whoever is constantly underestimating, that constant underestimation will actually be their real price), but the above points still hold. It's just not worth it. Definitely not worth it if you don't have the client paying for the specification/planning that's needed for the quote.
- seanwilson 6y ago
  On the other side, if you ask a lot of good questions and give a quote that's within budget, the client is going to be suspicious of another quote where similar insightful questions weren't asked first. If another quote is very cheap, the client will probably question if that's going to reflect the quality of the work. There's also risk that the developer they take the requirements + design doesn't really understand what they're getting into and can't execute. I don't think there's any easy answers, but generally you want to work on attracting clients that are more interested in high quality work over the cheapest price where shopping around like this isn't a good use of their time. Chatting about rough budgets first and making sure the client is going to profit from the work helps too. It's great when you get to charge for the planning phase though because you're not feeling rushed into committing to a quote with too many unknowns that might not really solve their problem. If you explain why it's risky to quote with so little information, some clients will listen and aren't going to go with someone asking nothing and offering a cheap price.

indymike 6y ago

I made a ton of money from fixed price contracts. Estimated at $100/HR average real hourly was $150/HR. You can't be constantly up against unknowns and you have to have a predictable cadence. If you stay focussed and can reuse deliverables it really helps. I did digital marketing so lots of landing pages and integration with crm and email marketing.