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I've moved my effective hourly rate from $250/h to up to $1k/h by billing on a project basis. I did this after I ran across Jonathan Stark's book Hourly Billi

I've moved my effective hourly rate from $250/h to up to $1k/h by billing on a project basis. I did this after I ran across Jonathan Stark's book Hourly Billing is Nuts[1] and implemented a lot of his advice. The two best things I've done to increase my effective hourly rate and my topline revenue in my solo consulting practice have been 1) taking his advice to ditch hourly billing and 2) niching down to focus on Trial to Paid conversion[2]. 1 - https://jonathanstark.com/hbin https://jonathanstark.com/hbin 2 - http://www.trialtopaid.com http://www.trialtopaid.com

crpietschmann 4y ago
Interesting you say you use http://www.trialtopaid.com http://www.trialtopaid.com to make money when that site is down...
- kareemm 4y ago
  https://www.trialtopaid.com https://www.trialtopaid.com (https) doesn't work right now but http://www.trialtopaid.com http://www.trialtopaid.com (http) redirects to my consulting site https://www.reemer.com https://www.reemer.com. If you're using an extension that only does https you won't get redirected. Haven't bothered setting TTP.com up properly yet. Shoeless cobbler's kids, etc.
  - deleted 4y ago
    [deleted]
  - goldenkey 4y ago
    +1 doctor who smokes.
Aeolun 4y ago
How do you bill on a project basis? Half the people say that billing anything other than hourly is nuts, and the other group says anything other than fixed price is nuts.
- kareemm 4y ago
  I niche down and understand what my customers want. I set reasonable prices for the size of customer I want ($1-$10M ARR B2B SaaS) and the kind of results I can deliver and post them on my site[1]. When I get an inbound request we're not even talking price because anybody who contacts me has seen them. I'm leaving money on the table but I don't want to spend time negotiating, it lengthens the sales cycle. I don't do custom work until a second phase. The phase 1 service I offer goes through my standardized process so I know how long it'll take to deliver. There's very little variance which makes it easier for me to know my cost to deliver. Phase 2 (wireframes) can be custom but by that point I have a lot more context on what I need to deliver, how long it'll take, and how much it's worth to the client. If they're asking about phase 2 it means I've proven myself and the negotiation is short because we've built trust. I tracked time for the first couple of projects because I wanted to see how long they took to deliver. So now I know my effective hourly rate. 1- https://www.reemer.com/services/ https://www.reemer.com/services/
  - anonymouse008 4y ago
    So is publishing content your “hook” or are you going to conferences and making connections first?
    - kareemm 4y ago
      I had a decent network when I niched down so emails to friends + family generated some jobs which resulted in word of mouth referrals. But email everybody who you think might be helpful - a lawyer friend of mine referred his friend that makes software for lawyers who needed my help. 2nd degree referrals can be great! Content has also worked but production has admittedly been anemic. Mostly because I've been so busy.
  - irrational 4y ago
    What does "niched down" mean and how do you "nich (niche?) down"?
    - 4y ago
jacquesm 4y ago
Same here. Hourly billing is nice when you're a lawyer or an accountant. The best part: the crappy customers all left and eventually got replaced by much better ones.
3pm 4y ago
From a customer perspective, with a fixed bid, isn't contractor incentivized to cut corners? Especially because software 'quality' is so subjective and hard to asses (comparing to a bathroom remodel for example). Is project billing mainly used for auxilary, non critical, work? E.g. build a static website for a company that sell shrink wrap software, not the core software itself?
- bhoey 4y ago
  > From a customer perspective, with a fixed bid, isn't contractor incentivized to cut corners? It would depend on who you're contracting with. There are no doubt countless (particularly massive, govt) projects where the contracted company does only the bare minimum work under the contract and doesn't care about burning the relationship. On the other hand the general arguments in favor of fixed bid from the client side is that it a) gives the client a specific number to budget/get approval for and b) it incentivizes the contractor to time-efficiently deliver what has been agreed to. Fixed bids work best when both parties have a shared, concrete idea of what needs to be delivered including level of quality and the likely amount minor changes along the way. However in practice this is often not the case, and when a difference of good-faith expectations happens usually no one is left happy. The client may feel that certain aspects were presumed to be included in the fixed bid proposal and will likely need to submit formal change requests to pay for more work (that may need to get additional approval). On the other side the contractor may feel the client is trying to squeeze potentially a sizable amount of free work beyond what was agreed upon/charged. Contracting on a time & materials basis alleviates most of the problems mentioned, but comes with its own downsides/risks for both sides.
- granshaw 4y ago
  Isn’t the inverse also true? That the contractor is incentivized to create extra work or drag things out when charging hourly? I suppose deadlines mitigate this…
  - 3pm 4y ago
    Yes, I think it is a tradeoff between the two. Since this thread is about individual contractors (not big consultancies), for customer it might be easier to control hourly rate contractor. Because it is easier to spot if someone is creating extra work. As opposed to assessing whether a final project not only works, but is up to customer's quality standards (whatever those might be).
kornhole 4y ago
This depends on the types of projects. If you are doing a project where you have decent control and scope, project billing is ideal for both client and contractor. Unfortunately many projects I work are huge and shift constantly due to other factors, people, and organizations out of my control. So going to hourly on these puts the responsibility on those managing the project.
nraynaud 4y ago
My impression is that ditching the hourly billing is for people who have already honned their skills and market and are confident in their habilities.

crpietschmann 4y ago

Interesting you say you use http://www.trialtopaid.com http://www.trialtopaid.com to make money when that site is down...

kareemm 4y ago
https://www.trialtopaid.com https://www.trialtopaid.com (https) doesn't work right now but http://www.trialtopaid.com http://www.trialtopaid.com (http) redirects to my consulting site https://www.reemer.com https://www.reemer.com. If you're using an extension that only does https you won't get redirected. Haven't bothered setting TTP.com up properly yet. Shoeless cobbler's kids, etc.
- deleted 4y ago
  [deleted]
- goldenkey 4y ago
  +1 doctor who smokes.

Aeolun 4y ago

How do you bill on a project basis? Half the people say that billing anything other than hourly is nuts, and the other group says anything other than fixed price is nuts.

kareemm 4y ago
I niche down and understand what my customers want. I set reasonable prices for the size of customer I want ($1-$10M ARR B2B SaaS) and the kind of results I can deliver and post them on my site[1]. When I get an inbound request we're not even talking price because anybody who contacts me has seen them. I'm leaving money on the table but I don't want to spend time negotiating, it lengthens the sales cycle. I don't do custom work until a second phase. The phase 1 service I offer goes through my standardized process so I know how long it'll take to deliver. There's very little variance which makes it easier for me to know my cost to deliver. Phase 2 (wireframes) can be custom but by that point I have a lot more context on what I need to deliver, how long it'll take, and how much it's worth to the client. If they're asking about phase 2 it means I've proven myself and the negotiation is short because we've built trust. I tracked time for the first couple of projects because I wanted to see how long they took to deliver. So now I know my effective hourly rate. 1- https://www.reemer.com/services/ https://www.reemer.com/services/
- anonymouse008 4y ago
  So is publishing content your “hook” or are you going to conferences and making connections first?
  - kareemm 4y ago
    I had a decent network when I niched down so emails to friends + family generated some jobs which resulted in word of mouth referrals. But email everybody who you think might be helpful - a lawyer friend of mine referred his friend that makes software for lawyers who needed my help. 2nd degree referrals can be great! Content has also worked but production has admittedly been anemic. Mostly because I've been so busy.
- irrational 4y ago
  What does "niched down" mean and how do you "nich (niche?) down"?
  - 4y ago

jacquesm 4y ago

Same here. Hourly billing is nice when you're a lawyer or an accountant. The best part: the crappy customers all left and eventually got replaced by much better ones.

3pm 4y ago

From a customer perspective, with a fixed bid, isn't contractor incentivized to cut corners? Especially because software 'quality' is so subjective and hard to asses (comparing to a bathroom remodel for example). Is project billing mainly used for auxilary, non critical, work? E.g. build a static website for a company that sell shrink wrap software, not the core software itself?

bhoey 4y ago
> From a customer perspective, with a fixed bid, isn't contractor incentivized to cut corners? It would depend on who you're contracting with. There are no doubt countless (particularly massive, govt) projects where the contracted company does only the bare minimum work under the contract and doesn't care about burning the relationship. On the other hand the general arguments in favor of fixed bid from the client side is that it a) gives the client a specific number to budget/get approval for and b) it incentivizes the contractor to time-efficiently deliver what has been agreed to. Fixed bids work best when both parties have a shared, concrete idea of what needs to be delivered including level of quality and the likely amount minor changes along the way. However in practice this is often not the case, and when a difference of good-faith expectations happens usually no one is left happy. The client may feel that certain aspects were presumed to be included in the fixed bid proposal and will likely need to submit formal change requests to pay for more work (that may need to get additional approval). On the other side the contractor may feel the client is trying to squeeze potentially a sizable amount of free work beyond what was agreed upon/charged. Contracting on a time & materials basis alleviates most of the problems mentioned, but comes with its own downsides/risks for both sides.
granshaw 4y ago
Isn’t the inverse also true? That the contractor is incentivized to create extra work or drag things out when charging hourly? I suppose deadlines mitigate this…
- 3pm 4y ago
  Yes, I think it is a tradeoff between the two. Since this thread is about individual contractors (not big consultancies), for customer it might be easier to control hourly rate contractor. Because it is easier to spot if someone is creating extra work. As opposed to assessing whether a final project not only works, but is up to customer's quality standards (whatever those might be).

kornhole 4y ago

This depends on the types of projects. If you are doing a project where you have decent control and scope, project billing is ideal for both client and contractor. Unfortunately many projects I work are huge and shift constantly due to other factors, people, and organizations out of my control. So going to hourly on these puts the responsibility on those managing the project.

nraynaud 4y ago

My impression is that ditching the hourly billing is for people who have already honned their skills and market and are confident in their habilities.