Comments on: Why I Never Bill by the Hour http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/ Cloud Computing Technologist. Application Architect. Experienced Consultant. Thu, 14 Apr 2011 21:43:54 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: mrichman http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-816 mrichman Thu, 28 Oct 2010 18:05:55 +0000 http://www.markrichman.com/?p=138#comment-816 Why would you do business with a client who doesn't know what they want? It's okay for them to change their mind, but your response should be a new proposal, not an hourly rate. Why would you do business with a client who doesn't know what they want? It's okay for them to change their mind, but your response should be a new proposal, not an hourly rate.

]]> By: 12ewfgdb http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-815 12ewfgdb Thu, 28 Oct 2010 12:20:59 +0000 http://www.markrichman.com/?p=138#comment-815 This is software. It's not like renovating a bathroom where only labor is involved (choose a different tile, pay for the costlier tile, but the labor cost is the same). As long as the client is so so so sure of what he/she wants, the fixed price is a great way to go. But in software, things change (understandably so). If the client want's a change today and another 2 days later that completely contradicts the change requested, what are you going to do? Tell yourself, oh heck, now I have to start all over again, or, I know you're a small business, and you didn't know exactly what you wanted, so you know, I really need to charge hourly to make this work for both you and me. This is software. It's not like renovating a bathroom where only labor is involved (choose a different tile, pay for the costlier tile, but the labor cost is the same). As long as the client is so so so sure of what he/she wants, the fixed price is a great way to go. But in software, things change (understandably so). If the client want's a change today and another 2 days later that completely contradicts the change requested, what are you going to do? Tell yourself, oh heck, now I have to start all over again, or, I know you're a small business, and you didn't know exactly what you wanted, so you know, I really need to charge hourly to make this work for both you and me.

]]> By: Michael Liberty http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-811 Michael Liberty Wed, 15 Sep 2010 20:01:02 +0000 http://www.markrichman.com/?p=138#comment-811 I agree and the point I always hear against fixed billing is it isn't flexible.<br><br>I think it is, you can easily negotiate reduced/increased costs for the client if they are adding/changing features. I agree and the point I always hear against fixed billing is it isn't flexible.

I think it is, you can easily negotiate reduced/increased costs for the client if they are adding/changing features.

]]> By: Michael Liberty http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-812 Michael Liberty Wed, 15 Sep 2010 19:59:43 +0000 http://www.markrichman.com/?p=138#comment-812 Agreed. I also think that the big argument against fixed billing is "flexibility" and how people relate that to Agile programming, but there's no reason why you can't negotiate fixed extra costs for new features of changes to existing requests that will take more time. Agreed. I also think that the big argument against fixed billing is “flexibility” and how people relate that to Agile programming, but there's no reason why you can't negotiate fixed extra costs for new features of changes to existing requests that will take more time.

]]> By: Why I Always Bill By The Hour | Brent Ozar - Too Much Information http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-442 Why I Always Bill By The Hour | Brent Ozar - Too Much Information Wed, 03 Feb 2010 13:02:17 +0000 http://www.markrichman.com/?p=138#comment-442 [...] I Always Bill By The Hour Mark Richman (Blog – Twitter) wrote a thought-provoking post about why he never bills by the hour.  He uses a fixed-rate, value-based billing system; he works with the client to build an exact [...] [...] I Always Bill By The Hour Mark Richman (Blog – Twitter) wrote a thought-provoking post about why he never bills by the hour.  He uses a fixed-rate, value-based billing system; he works with the client to build an exact [...]

]]> By: Johnny http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-375 Johnny Fri, 22 Jan 2010 16:47:48 +0000 http://www.markrichman.com/?p=138#comment-375 Thanks a lot for sharing this information has really proven to be helpful. I really enjoy reading easy articles leading straight to the point. Thanks a lot for sharing this information has really proven to be helpful. I really enjoy reading easy articles leading straight to the point.

]]> By: Mark A. Richman http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-97 Mark A. Richman Tue, 17 Nov 2009 14:26:40 +0000 http://www.markrichman.com/?p=138#comment-97 Page 150 of the bible: http://www.amazon.com/Value-Based-Fees-Ultimate-Consultant-Pfeiffer/dp/0470275847/ref=sr_1_1?ie=UTF8&s=books&qid=1258467961&sr=8-1 Page 150 of the bible: http://www.amazon.com/Value-Based-Fees-Ultimate-Consultant-Pfeiffer/dp/0470275847/ref=sr_1_1?ie=UTF8&s=books&qid=1258467961&sr=8-1

]]> By: David Winch http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-96 David Winch Tue, 17 Nov 2009 14:09:56 +0000 http://www.markrichman.com/?p=138#comment-96 This comment editor deleted the quote from Alan's book! #29 out of Seventy Ways to Raise Fees and/or Increase Profits Immediately says:- Respond to "Scope Creep" with "I'll send you a new proposal" This comment editor deleted the quote from Alan’s book!

#29 out of Seventy Ways to Raise Fees and/or Increase Profits Immediately says:-

Respond to “Scope Creep” with “I’ll send you a new proposal”

]]> By: David Winch http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-95 David Winch Tue, 17 Nov 2009 14:03:46 +0000 http://www.markrichman.com/?p=138#comment-95 Mark I don't think Alan Weiss actually says 'Scope Creep' doesn't matter. Given the starting point of a fixed-fee, fixed scope project, if anything comes up that's within the scope, it gets done within the fee. However, Alan says in his book Value-Based Fees <> By definition, Scope Creep is outside the agreed scope, so those tasks can form a separate, separately chargeable project. The Client then faces, because you put it in front of them, the question of do we stop the current project to work on the new one, or do we do the new one when the current one is finished. You can't be working on two projects for the same client at the same time. David Mark

I don’t think Alan Weiss actually says ‘Scope Creep’ doesn’t matter.

Given the starting point of a fixed-fee, fixed scope project, if anything comes up that’s within the scope, it gets done within the fee.

However, Alan says in his book Value-Based Fees <>

By definition, Scope Creep is outside the agreed scope, so those tasks can form a separate, separately chargeable project.

The Client then faces, because you put it in front of them, the question of do we stop the current project to work on the new one, or do we do the new one when the current one is finished.

You can’t be working on two projects for the same client at the same time.

David

]]> By: Mark A. Richman http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-94 Mark A. Richman Tue, 17 Nov 2009 13:47:52 +0000 http://www.markrichman.com/?p=138#comment-94 This is probably the most difficult question in applying Value-Based Fees to IT consulting. I do not yet have a perfect answer. According to Alan Weiss, who pioneered Value-Based Fees, the short answer would be "it doesn't matter." Presumably, since you are providing so much value to your client (versus hourly billing), and your fee is substantially higher as a result, that scope creep is acceptable, given that it is in alignment with the objectives, measures, and value conceptually agreed upon during your initial engagement with the client. (Holy run-on sentence, Batman!) That said, I think that is an evasive bullshit answer. For this reason, I've created <a href="http://www.marksforums.com" target="_blank" rel="nofollow">Mark's Forums</a>, where hopefully we can explore these issues together, and create an online community of best-practices for concerns such as these. Would you mind <a href="http://www.marksforums.com" target="_blank" rel="nofollow">registering</a> and reposting this question on the forums? It's the perfect starter thread for the community! Thank you very much! This is probably the most difficult question in applying Value-Based Fees to IT consulting. I do not yet have a perfect answer. According to Alan Weiss, who pioneered Value-Based Fees, the short answer would be “it doesn’t matter.” Presumably, since you are providing so much value to your client (versus hourly billing), and your fee is substantially higher as a result, that scope creep is acceptable, given that it is in alignment with the objectives, measures, and value conceptually agreed upon during your initial engagement with the client. (Holy run-on sentence, Batman!)

That said, I think that is an evasive bullshit answer. For this reason, I’ve created Mark’s Forums, where hopefully we can explore these issues together, and create an online community of best-practices for concerns such as these.

Would you mind registering and reposting this question on the forums? It’s the perfect starter thread for the community!

Thank you very much!

]]> By: Shawn Stratton http://www.markrichman.com/2009/11/17/why-i-never-bill-by-the-hour/comment-page-1/#comment-93 Shawn Stratton Tue, 17 Nov 2009 13:31:33 +0000 http://www.markrichman.com/?p=138#comment-93 But doesn't this trap you in the inevitable feature creep that clients generally tend to do. Ie. you quote a project that should be fairly easy and with the new feature requests you now have 4 or 5 times the work. Where do you draw the line? But doesn’t this trap you in the inevitable feature creep that clients generally tend to do. Ie. you quote a project that should be fairly easy and with the new feature requests you now have 4 or 5 times the work. Where do you draw the line?

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