| When you bill by the hour, what you’re really saying is “I have no idea if what I’m doing will have any value, and I honestly don’t care — all that matters is that I am not exposed to risk for even a single minute of my time working for you. I get paid for every minute.” Yes, that's the point. As a software freelancer you have no responsibility to take on risk for a client company that you have no ownership in. You'd be a fool to do otherwise. Every hourly billable contract I've signed has included a detailed scope. Contracts that very clearly delineate responsibilities and compensation. Both parties are agreeing to the value the freelancer is providing. You'd be a fool to hire a freelancer without understanding the value they provide. And as a freelancer you'd be a fool to sign a contract without clearly defined responsibilities. The author seems to believe the method of compensation determines the value provided. But these things are orthogonal. I've worked with multi-million dollar agencies that bill by the hour. They provided a lot of value, they knew precisely the outcomes they were responsible for, and delivered those outcomes. Blog posts like this come along every so often, usually when a freelancer discovers that there are circumstances where they can make more money on a fixed cost contract. For instance "This project will take me 40 hours. If I charge $100/hr I'll gross $4000 total. Or I could quote a fixed cost of $5000 total, and net an additional $1000". The downside is estimating software is hard, mostly because the end product is almost always a moving target. Generally speaking, clients have a good idea of what they want. But "what they want" almost always changes as a project progresses. The upside for the freelancer is that if the scope can be nailed down, and a client is predictable, a fixed cost model allows the freelancer to capture any additional value/profit from their productivity. Which is why savvy businesses are fine with paying hourly rates. They want to fully capture the value of the freelancer's productivity. In my experience, from a freelance point of view, it tends to be a wash. There are many fixed cost projects where you will come out ahead. But there are always projects with tons of scope creep, and cost increases are almost always more difficult to negotiate on fixed cost contracts. But YMMV, and there's no single correct answer. |