Re:5 reasons why hourly rate is better than fixed price
by iktorn on Wednesday July 10, 2013 @10:13AM
(#6019688)
The problem with no 3 is that not every job can be measured in $$$. Especially when you are building an MVP and/or experimenting with features.
I think your approach is definitely valid for "traditional consulting" but a bit less so for more plain webdev work.
Re:5 reasons why hourly rate is better than fixed price
by j45 on Wednesday July 10, 2013 @10:22AM
(#6019782)
I disagree. Every job can be measured in terms of value. Especially mutually agreeable value. These though, are business skills and not tech skills.
Re:5 reasons why hourly rate is better than fixed price
by iktorn on Wednesday July 10, 2013 @10:55AM
(#6020101)
But than you are introducing overhead of deciding this. For obvious reasons this is something that needs to be negotiated with a client and documented.
Re:5 reasons why hourly rate is better than fixed price
by marcomassaro on Wednesday July 10, 2013 @09:57AM
(#6019521)
The only problem with value pricing is its not for every client. Its very hard to sell a client on value - especially if they are skeptical. And if your work doesn't increase value then your in a sticky situation.
1 - Start out with fixed price estimates based on time (I think this will take 10 hours, so I estimate £1000)
2 - Develop good relationships with clients and start just charging hourly for work done (This took 12 hours, so here's a bill for £1200)
3 - Take patio11 (et al)'s advice and start charging based on value (this 10 hour job will increase your profits by £100,000 so I'll charge you £10,000)
In short, hourly IS better than fixed price time based estimates, but fixed price value based estimates are even better.