As a blanket statement, I think that's ridiculous.
Hourly is a good choice for contracts where they are looking to buy labor. Which is a common model, because they often see contract labor as a substitute for employee labor.
The other models you mention can be much better, but also require the contractor to have both particular skills and enough relationship power to make them work. I have seen well-meaning developers absolutely get screwed on fixed scope contracts. And I've also seen less-well-meaning developers absolutely screw their clients on fixed price contracts. This is an area where blanket statements are harmful.
You can’t do hourly in London, the lowest you can go is a day rate, hours being 1:1 with fees is a great way to leave money on the table as a contractor. As a contractor you want to structure your deliverables on your terms so you can choose how the spend your time. Alan Weiss wrote a lot about this and his writings changed my life. Also, if you’re hourly in London you can’t claim to be independent and you’ll get smashed on tax as HMRC will treat you as a perm employee because your client controls your hours and activities.
How do clients get screwed with fixed fee? Clients should pay for value, not hours sat in a chair.
There are plenty of ways to screw clients with fixed-fee projects. The most common is to ask the client what they want, write that down, and build it for a fat fee based on the value they imagine they'll be getting. It turns out clients mostly don't know shit about what they actually need. Indeed, for many projects it's impossible to know the right thing to build up front, as much of the data is unavailable until you start shipping things. So what they sign up for and what will actually help them can diverge wildly.
Now that you have shipped the technically correct but not very useful thing, you collect the fee and then start accepting "change orders" at a punitive rate. At this point switching to another contractor will be even more risky and expensive, so they'll probably just suck it up. Or if you're really good at the game, you then negotiate a whole new fixed-fee contract with a higher price tag, and the deliver what they now think they want.
Bonus points if, as I've seen a big-name global contractor do, you deliver something not even barely working but possibly conforming to specs, and then just walk off the job. Even though the client has contractual obligations that they can't fulfill if the software doesn't work. At that point, the client realizes that a) they still need the software, b) the big-name contractor is the only who can deliver in time, and c) suing is risky, will take years, and anyway the big-name contractor can afford more lawyers. In this case the client signed another multi-million dollar contract with the big-name contractor, easily doubling the "fixed" fee. I lost touch with my contacts there before the thing ever worked, so I don't know how many times the big-name global contractor pulled this off on the same job.
And the clients aren’t to blame? Some will force waterfall on you then change their minds on requirements, am I a charity that just gives work away for free when they change their mind?
Many large companies absolutely refuse agile delivery and require fixed scope and cost to get anything done.
> "fuck the clients, they deserve to get cheated".
Why use quotation marks for something I didn't say? Nothing I've said means "fuck the clients" unless you are maliciously taking the worst possible interpretation.
A change that takes a massive amount of time and effort isn't something I should do for free.
I'm more than happy to build a backlog, refine it, and build until there's a RC... so few enterprise clients want to subscribe to the perceived risk, they'd rather spend months specifying everything upfront to make some senior person happy whether that delivery methodology has been proven to work or not.
> Clients should pay for value, not hours sat in a chair.
I think the implication is that if one party is capturing the excess value produced disproportionately, that is screwing the other side. Particularly if this occurs because of information that is asymmetric in negotiation.
If that’s the case, getting screwed is pretty common.
If my SAP implementation is going to save over 1 million per year in increased manufacturing efficiency, how should I price my services? The floor is set by the cheapest contractors in my market, the ceiling is how ever high I can negotiate.
The client will capture far more value than me over the lifetime of the product. I also don’t want to charge by the hour because there’s a conflict of interest and I want to detach hours worked from fees charged otherwise I’m just slaving away.
Hourly is for blue collar work, it’s not professional at my and your level.
It really depends. In general I prefer charging by the task but that assumes a well-scoped and predictable task. That works for some things and not for others.
Of course, there are a number of professions (law, accounting, etc.) where hourly charges are absolutely the norm. I've done some legal work and it was in some ways very nice to get paid whenever you were "on the clock."
I agree with Alan Weiss, lawyers are unprofessional and mostly terrible at maximising income. They charge 1:1 hours to fees which is a bad deal for a professional.
The legal work I did was for an expert witness case as a subject matter expert (not a lawyer). There is no way we could have/would have agreed to a fixed fee up front unless it was for a really outrageous amount. (Well, it ended up being a pretty outrageous amount anyway but there's no way we could have reasonably scoped the work.)
Most of the work we did in general was for specifically scoped deliverables and we actually tried very hard not to do day rates, much less hourly rates, but this was one case it really wasn't avoidable--and, of course, was the way the white shoe law firm operated.
The point is that we would have had no way of pricing "value" up-front. It wasn't our primary business (which we mostly did price based on value). So charging $500/hour (or whatever it ended up being) made a lot more sense for everyone than just throwing a $100K invoice out there when we really didn't have any idea what sort of time commitment we were looking at.
