I'm not completely against hourly and what you describe sounds decent as long as the client has a realistic budget and is reasonable about estimates. It's hard to do fixed price when there's a lot of unknowns or there's an unpredictable workload for example. I see people mention day and week rates as well, but this forces you to work in minimum increments which is less flexible.
I just can't stand getting into scenarios where you start considering eating hours from your timesheet so the client doesn't get annoyed e.g. because you didn't feel you were being 100% productive for whatever reason, you got sidetracked by a hard to explain/justify bug, you went for a walk to think about a problem, you're going over budget, you think because you had to learn something new you shouldn't charge for the time, because part of a meeting included some casual chat. It's a lot of stress to the client too having to keep track of unpredictable costs.
There's such a different feeling to working where you're not having to keep an eye on the clock having thoughts like "that's 30 minutes up already, I better find a solution to this soon or my timesheet will look bad".
Fixed price lets you just get on with things and focus on actually being efficient instead of worrying about how efficient you're looking.
Both strategies are useful. I would be interested to hear what the audience and author were in your statement about "getting away from hourly". Was that in recommendation adding business value and not being hourly labor or something else?
I see fixed price being more of a tool in design projects, where the goal might be concrete but the path to get there is open, or the client wants a basket of options.
Where as doing an n-party integration between multiple inflight projects at a fixed price would be poor idea, UNLESS, UNLESS the fixed price is some high multiple of the P99 and some low multiple of the P99.9bar
In the first case, the value is in the answer, not the difficulty in which it was arrived at. In the second case, the actual work is what is needed and being paid for.
But at a high enough level, all contracts are fixed price.
> Was that in recommendation adding business value and not being hourly labor or something else?
A combination usually, with benefits to the client too:
- Client + contractor aren't both wasting time with micromanagement that could be put into adding business value instead.
- Contractor is incentivised to work smarter, finish tasks quicker and keep the business goal in mind.
- Client can budget because they know the final price.
- Contractor is happier and less stressed because they're not being micromanaged.
These are all flipped with hourly.
Fixed price will be horrible for the contractor if they're not charging enough and controlling scope creep though, but with hourly the client is taking the business risk instead.
I just can't stand getting into scenarios where you start considering eating hours from your timesheet so the client doesn't get annoyed e.g. because you didn't feel you were being 100% productive for whatever reason, you got sidetracked by a hard to explain/justify bug, you went for a walk to think about a problem, you're going over budget, you think because you had to learn something new you shouldn't charge for the time, because part of a meeting included some casual chat. It's a lot of stress to the client too having to keep track of unpredictable costs.
There's such a different feeling to working where you're not having to keep an eye on the clock having thoughts like "that's 30 minutes up already, I better find a solution to this soon or my timesheet will look bad".
Fixed price lets you just get on with things and focus on actually being efficient instead of worrying about how efficient you're looking.