<story><title>Every freelancer starts out undervaluing their work</title><url>http://kenwestgaard.com/the-gurus-got-5-questions-set-rate/</url></story><parent_chain><item><author>lordnacho</author><text>I don&amp;#x27;t get why people are so keen on the per-hour model. This puts a lot of pressure on you to be fully productive and count hours like a lawyer. It also makes you think you&amp;#x27;re losing money when you&amp;#x27;re not billing, and the customer likewise feels the time&amp;#x2F;money pressure.&lt;p&gt;I&amp;#x27;ve negotiated fixed-price deals where I&amp;#x27;m quite certain I can get the job done in x number of weeks, based on having done something similar before. And that&amp;#x27;s a quite leisurely x weeks, where I&amp;#x27;m not really feeling any uncertainty about any part of the project (ie I know what APIs will be used, business logic seems simple, research is done already). At the same time setting a leisurely schedule also means if there is something unexpected, you can spend a bit more time solving it. Or take a break when you&amp;#x27;re ahead.&lt;p&gt;Regarding the customers, being choosy appears to be very important. Anyone who mentions outsourcing to (somewhere cheap) is politely moved on. Anyone who doesn&amp;#x27;t grasp what they&amp;#x27;re after (a social network, with an iOS and Android app, and videos, and ...) is quoted a longer timeframe. Customers also need to be made aware of the importance of feedback, as in the agile model. That way they always get what they asked for, and you don&amp;#x27;t waste time on what didn&amp;#x27;t come to mind.</text></item></parent_chain><comment><author>mcintyre1994</author><text>In Patrick (Patio11)&amp;#x27;s blog with his consultancy rates [0] he switched very early from hourly payments to weekly - that seems like a really nice tradeoff. You&amp;#x27;re not counting hours, if the scope changes you can adjust pretty fluidly, and you&amp;#x27;re not having to go chasing gigs all the time.&lt;p&gt;[0] &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;www.kalzumeus.com&amp;#x2F;2015&amp;#x2F;05&amp;#x2F;01&amp;#x2F;talking-about-money&amp;#x2F;&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.kalzumeus.com&amp;#x2F;2015&amp;#x2F;05&amp;#x2F;01&amp;#x2F;talking-about-money&amp;#x2F;&lt;/a&gt; If you haven&amp;#x27;t read this, it&amp;#x27;s fantastic</text></comment>
<story><title>Every freelancer starts out undervaluing their work</title><url>http://kenwestgaard.com/the-gurus-got-5-questions-set-rate/</url></story><parent_chain><item><author>lordnacho</author><text>I don&amp;#x27;t get why people are so keen on the per-hour model. This puts a lot of pressure on you to be fully productive and count hours like a lawyer. It also makes you think you&amp;#x27;re losing money when you&amp;#x27;re not billing, and the customer likewise feels the time&amp;#x2F;money pressure.&lt;p&gt;I&amp;#x27;ve negotiated fixed-price deals where I&amp;#x27;m quite certain I can get the job done in x number of weeks, based on having done something similar before. And that&amp;#x27;s a quite leisurely x weeks, where I&amp;#x27;m not really feeling any uncertainty about any part of the project (ie I know what APIs will be used, business logic seems simple, research is done already). At the same time setting a leisurely schedule also means if there is something unexpected, you can spend a bit more time solving it. Or take a break when you&amp;#x27;re ahead.&lt;p&gt;Regarding the customers, being choosy appears to be very important. Anyone who mentions outsourcing to (somewhere cheap) is politely moved on. Anyone who doesn&amp;#x27;t grasp what they&amp;#x27;re after (a social network, with an iOS and Android app, and videos, and ...) is quoted a longer timeframe. Customers also need to be made aware of the importance of feedback, as in the agile model. That way they always get what they asked for, and you don&amp;#x27;t waste time on what didn&amp;#x27;t come to mind.</text></item></parent_chain><comment><author>maratd</author><text>&amp;gt; I don&amp;#x27;t get why people are so keen on the per-hour model.&lt;p&gt;How many years have you been doing this? It doesn&amp;#x27;t sound like you&amp;#x27;ve been at this for too long.&lt;p&gt;&amp;gt; I&amp;#x27;ve negotiated fixed-price deals where I&amp;#x27;m quite certain I can get the job done in x number of weeks&lt;p&gt;This works fine for a client who wants a very concrete x, y, or z.&lt;p&gt;There&amp;#x27;s a problem with this sort of client. They only want x, y, or z and after you give it to them, well, you&amp;#x27;re done.&lt;p&gt;If you have that sort of client and you&amp;#x27;re charging by the hour, you&amp;#x27;re an idiot. Quote them a fixed price at something like 500 per hour for what you estimate the work will take. They&amp;#x27;ll go for it, you make bank.&lt;p&gt;At some point in your freelancing career you&amp;#x27;re going to start feeling jealous. Of the &amp;quot;normal&amp;quot; guy. They guy who wakes up every morning knowing he has a full day of work and is working for the same person he worked for yesterday. He knows what to expect, how things operate, etc. Everything is &lt;i&gt;stable&lt;/i&gt;.&lt;p&gt;Stability is an illusion, but it&amp;#x27;s a nice one.&lt;p&gt;At this point, you&amp;#x27;re going to start looking for clients who don&amp;#x27;t want x, y, or z. You&amp;#x27;re going to look for clients who need x. And some more x. Then some more x. They keep needing x and there&amp;#x27;s no end.&lt;p&gt;These clients are professionals. They know the industry. They&amp;#x27;re not really clients, they&amp;#x27;re middle men. They&amp;#x27;re agencies, marketing guys, whatever. They have a constant stream of work. They know it. And they know the best way to maximize their profit is to pay you by the hour. They will only pay you by the hour. They will laugh if you suggest anything else.&lt;p&gt;It&amp;#x27;s alluring to you, because you get a ton of work, all the time and you&amp;#x27;re still billing twice what you&amp;#x27;d get working a regular job, and you still get to work from home, set your own hours, specify your own tooling, etc.&lt;p&gt;At some point, you&amp;#x27;ll get tired of this and decide you want to be the middle man. You start getting your own clients, hiring other guys to do the work ... and guess what? You&amp;#x27;re going to pay them by the hour. Because that&amp;#x27;s how you maximize your profit.&lt;p&gt;Now, I know there are one-man armies out there who have their own clients, bill fixed price, do all the work themselves and are always busy. I know they&amp;#x27;re out there because I used to do that. It&amp;#x27;s exhausting. You have to constantly keep marketing yourself, keep working of course, and wear a bunch of hats at the same time. At some point, you&amp;#x27;ll have the desire to &amp;quot;outsource&amp;quot; the marketing portion of the equation and that&amp;#x27;s when you&amp;#x27;ll start billing by the hour.</text></comment>