| curtis makes some excellent points about the whole concept of freelancing and how to make real long term work by bringing real value to your customers. These will generally not argue on price since they understand and see the value that the price is getting them (either increased income or decrease cost).
With that said, I personally would not think recommend the paid hourly work even with the structure of milestones. I have experimented with both hourly and fixed bid (as well as spent a couple of years working in business to understand their view point) and here is what I have found out from my own experiences (which should not be generalized of course): * sometimes (read quite often in my experience) a high value solution to a client takes you a very little amount of time if you bill hourly you sell yourself short against the only measure that matters for your clients and that is how much value did this project bring me * Hourly billing tends to make clients cut projects before the actual objective of the project is achieved so that they can save cost and what this means to you is that for this client (and anyone they talk to) the project was a- a failure and b- not completed by you * Hourly billing allows you to choose to be lazy. What this means is that you will not take the time to assess the project and its scope because heck your are being paid by the hour and if you are lazy you get in trouble * Clients need to assess risk to reward ratio of any project they take (just like you should) an open ended project is not a good thing for them. Without a cost it is difficult to assess whether a project ROI is useful. Now with the above said there are times when billing by the hour is the only course of action. In my experience these are as follows:
* Old clients that have learned that you bring high value who want to grow their business strategically and want you to add iterations to them. These you can bill by the hour because there will be alot of time set aside discussing strategy and building for future and changing things. The key here is that they know you are worth it.
* New clients where are referred to you who do not know what they want. This is when a client can not tell you really why they want the project or what is its success metric. I usually stay clear of this unless I am sold on what the vision is since it is difficult to define success. Warning however must be said you have to stand your ground when it comes to fixed bids scope. You can change scope a bit if a new change takes out an old one but you have to be firm. In my experience a fixed bid project without a defined metric of success is doomed to cost you more then its worth. |
The difference is I treat each milestone/iteration as a small project, requiring assesment, scoping and client buy-off (A change order to the contract, along with an estimate). If they want time limits before continuing past x number hours, I'm fine with that too.
I see the advantages are:
* Lower risk to me because the price is not fixed
* Lower customer risk because they see progress and can adjust as the project unfolds.
* Lower cost to them -- they don't pay extra to cover my risk.
* The client has more control since they can make course corrections along the way.
* Regular client touch-points are built in - they get more visibility, I can adjust expectations
* Scope changes just mean more billable hours
The feedback I've gotten is they like the flexibility, and are often more willing to say yes because of reduced risk.