Hourly Billing is Nuts (book)
hourlybillingisnuts.com
hourlybillingisnuts.com
I've done work fixed-priced work, hourly work, and product sales.
The most profitable of these has been on-site, short-term fixed-time contracts. That is, I go to a client's site for 1-2 weeks and work on a problem they have, customized for their site.
(I haven't done a subscription service, because I develop software for pharmaceutical R&D, and pharmas regard their data and even user queries to non-proprietary data sets as highly proprietary.)
I also know what my clients and customers in my field are willing to pay. Why should I believe that this author knows my field better than I do?
The link uses the phrase "effective hourly rate of $2000+ per hour". That "effective" is suspiciously hand-wavy. It's like saying that if I do 5 hours of sales and marketing work to sell a product for $10,000 that took me 1 year to develop, then the additional sales and marketing to get to that sale is "effectively" $2,000/hour.
It also reminds me of the guy who says he only works one hour per week, then to learn he spends his entire waking life hustling, but only calls part of it "work."
The link says: "As long as you bill yourself out by the hour, your clients will treat you as labor. Hired help. A pair of hands to be directed. "
WTF? This stinks of classism. We are labor. We are members of the working class. But master laborers from any field, whether carpenters, programmers, or rocket designers, are not "a pair of hands to be directed" any more than the VP of, say, a marketing company.
> "Right now, the book is a little over 100 pages"
I don't like that tally. When I look at the book pages screenshot with 111 pages, I see that 25 are single page chapter headings. It also looks like it has high line spacing and wide margins, which are common techniques to inflate the page count.
With that wariness in mind, would you care to explain what changed in your pricing model and why the other parts of the model didn't change? What is your "effective hourly rate", and what does "effective" mean to you?
My extended family is not so far out of poverty that such class warfare snobbery appeals to me.
You are not using the normal definition of "laborer". Merriam-Webster defines it as "a person who does hard physical work for money". Wikipedia defines it as "a person who works in one of the construction trades, traditionally considered unskilled manual labor, as opposed to skilled labor."
Neither you nor I mean that definition of laborer.
I believe you use it as a metaphorical slur. Rather than use that interpretaion, I decided to use the more common Marxist analysis of calling those who labor, including skilled laborers like programmers, the proletariat.
Your secret sauce is likely to encourage people to become capitalists, perhaps a rentier capitalist, and thereby join the bourgeoisie class.
Marx pointed out the petite bourgeoisie, of which we are members for I both consult and sell software, are more likely to identify with the haute bourgeoisie; those who truly control capital. But I prefer to identify with craft-based workers (and unlike the old AFL policy, promote labor solidarity over trade separatism; though free education/training and strong social services).
Now, I agree with Piketty that capital return is greater than the rate of economic growth, so if your proposal is that people should become capitalists, the you are right. But we cannot all become capitalists. That's why, to resolve the dilemma of the categorical imperative, I support a progressive global wealth tax.
As an observation, many people running a con choose marks who already half-believe in the con. The ones who follow up on a Nigerian prince scam are those who want to believe. Your last paragraph follows the same lines of only trying to convince those who want to believe you are right. If my guess is correct, and since I don't think a Marxist analysis like this is flawed, I think it's a shame that you find yourself needing to use these tactics for something I don't think is a scam.
Rather than trying to understand your ideas through promotional materials, I hoped to get some input from jagthedrummer, who it seems has found that they are not applicable to part of a business. I'm curious to know both the success and failures. jagthedrummer? Care to speak up?, since the author thinks I'm not worthy of his time.
I see that I have insulted you and for that I am sorry. I doubt that there is much I can say in this medium to undo that damage other than to tell you that it was unintentional.
I really don't see the word "labor" as a slur but I do agree that I didn't use it in the strictest sense. To me, the word "laborer" equates to something like: "someone who is instructed by their employer what to do."
I don't begrudge or judge anyone who is comfortable with such an arrangement. If my words contained a tone of disdain, it's because I've absorbed the frustrations of literally hundreds of people who are not comfortable with such an arrangement.
My book is for folks - usually experts in their field - who are sick of their employers telling them what to do. Sick of being micromanaged, second-guessed, and generally disrespected by clients who have nothing but a checkbook and an opinion.
My impression from your previous comment is that you do not fall into this category, and therefore, my book would be useless to you. In retrospect, I do understand why you took offense and again I apologize for that.
Yours,
Jonathan
My conclusion is that what’s in our heads is unique strategic knowledge that can seriously help clients to improve their businesses. Yes, they need us to do the keyboard-banging too, but the real value of our contribution is what’s between our ears.
I think it would be unwise to turn a practical book on pricing into a treatise on capitalism, socialism or socioeconomic differences between so-called classes. We should just read it for what it is and for what the author intended it to be: An easy-to-read book on the highly sensitive topic of pricing.
In an odd way, even employees are capitalists. They have various deals to negotiate and make from car payments to mortgages. Life is complex and it requires pretty good business savvy even from employees who want to get paid well for their expertise.
Since the book focuses on value pricing for consulting projects it's obviously not applicable to the SaaS that I run.
However it's been fantastic for my software development/architecture consulting.
I recently completed at project for a client where I used the value based approach from the beginning of the sales cycle and very early on identified the real goals that the client had in mind and was able to work with them to identify a dollar amount that they wanted to invest to fix the problem. We agreed on that amount and I went to work. After completing the project my effective hourly rate was around $600/hour, and the client was extremely happy with the results.
(I know you're not a fan of the term "effective hourly rate", but it's the best term I have to talk about that concept since I didn't agree to an actual hourly rate with the client.)
Had I gone with my old process of saying "this is my hourly rate and I'll track hours" it's doubtful that the client would have agreed to $600/hour and I would have made much less on that project.
I don't think Jonathan meant to use "laborer" as a slur of any kind. I think he's trying to get at the distinction between being "a pair of hands" on a project, who is told what to do and how to do it VS being "a brain" on the project who is operating at a higher level of abstraction to identify problems, propose possible solutions, determine which solution is best, etc...
Those are two very different things, and the advice in the book would be MUCH harder to apply if you are filling a "pair of hands" role.
Hope that makes sense and answers your questions.
I think the intended distinction here is that a Master level tradesperson is not typically paid by the hour but a "Laboror" would be. The Master tradesperson is trusted and accountable to deliver the work at a certain quality with specific outcomes. I see this book as helping developers (and designers) shift the conversation with clients away from "work" to "results" so that your accumulated skill is rewarded instead of your time commitment.