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I have hired a lot of contractors over the years, and I must say that if one of them pitched this to me I would likely walk away.

I thought this at first, as well. However, after reading the advice about only using "long-time customers" for this approach.

1) Only applies to a long time (happy) customer...and:

2) Said project should be appropriate for this sort of billing method. And will often vary, but I think he got it right. It should be a project that is important to the business where quoting and billing is difficult to nail down.

An example from my past: I used to do network config/wiring/support work for a small firm. They found out that I also wrote software and asked for my assistance on a small, very important, project in an area that was not my expertise (an EDI system). They didn't ask me for an up-front quote due to our previous business relationship. They did, however, gave me a short, hard deadline.

I billed them two hours instead of the twenty or so it took me to figure out the problem because I was inexperienced in the technologies they used. They volunteered a $1000 bonus to me on its completion.

I learned later that the short deadline was to give them enough time to pass the work off to a well known company that could easily get it done, but had quoted them north of $10,000.

I'm not complaining. This company and a few others that I did regular odd jobs for made my college years reasonable.

Really, all you're doing here is leveraging the relationship you have with a customer and the circumstances of the job are largely going to determine whether or not it would work or, as you put it, come of as naive and lacking confidence.

This customer knew from my past work that I was a little less expensive than most of their other options and yet I did quality work. They also knew I was going to school and -- like an employee of their company -- had to give me incentive to take on more work when it was necessary. I needed them, they needed me. In the case of this small assignment outside of my area of expertise, they saw underpaying me as more to their disadvantage.

I was shocked to receive the unsolicited bonus, but I'm willing to bet it would have been more than $1000 if I had just said "I don't know how to bill this. Pay me what you think it's worth" to this particular customer.

It is mentioned in the body of the text that the author advises it to be used with clients that you've already established a history with. And whom have a significant personal stake in the product anyhow. So it's less a junior contractor and more a close friend going "eh, sure, I'll do it for you. Just pay what you think it's worth."

Sure, if you've done several projects for that client and you charged them $100/hour each time, they'll be more likely to offer a price that's in line with that.

Still, it's a kind of gamble and not a very smart one.

estimation is a skill... it's an extremely difficult skill to master. I know I'm horrible about it. So yeah, you are right, this pitches the (difficult) job of pricing back on to the client.

However, I don't think that's always a bad idea. The thing is, as a contractor, I'm looking at the opportunity cost of the time and effort I put in to the project, right? but, as the client, you are looking at the value you get out of it. The two are almost wholly unrelated.

Now, if you've looked at how I set my prices, I generally use the 'what it costs me plus a reasonable profit' method (for me, 'reasonable profit' has to do with how long it takes to pay for my hardware, as that's basically what I'm selling.) And really, for commodity goods that have significant marginal costs in terms of investment capital required, I think that is the best and most fair way to do it. (using non-transparent and inconsistent pricing structures is a good way to get your commodity customers really, really pissed off.)

Now, I think contracting is fundamentally different from selling a commodity good. When I'm selling a commodity good, I don't really mind that my margin on each unit is a little (or even a lot) less than my competitors. I can make it up by simply selling more.

This is not true with contracting. my body has a expiration date; I mean, it's not set in stone, but my life will consist of a finite number of days, and each day I can only productively work for a small number of hours. So I really want to squeeze every bit of value out of it. So yeah; someone is going to have to do some work pricing it, either the client or the contractor. It sounds like this is one strategy for letting the contractor potentially share in some of the massive upside possible from technology work.

You are correct, however, consider that the quality of the work will probably be much higher from someone who is willing to do this kind of unorthodox pricing. One reason is because if any issues or changes come up then they'll be fine with adjusting their work without changing the price. You'll probably wind up paying less overall.

It even seems reasonable to spend 10 minutes figuring out what a fair price is, then pay them 20% less, since what you think is fair is usually too high. And if it isn't, oh well... it was their risk doing this pricing model in the first place.

This pricing model relies on high quality of the finished product. It wouldn't work otherwise. Therefore I don't understand why you'd walk away. You really would, if this were offered to you? It's likely you'd get an extremely good quality finished product along with any changes you needed afterwards.

I think "how you do it" matters a lot in this case a lot and context/relationship/the particular requirement all play a big role. Basically you are not just casually saying "pay me whatever you like". The customer already trusts you, values your skill/offerings, knows she wants to get the task done from you, and understands that it may be tough to price so a more flexible approach is good to ensure no time is wasted in coming up with a price.

What if the programmer says "I will put 9 hours of work into this and I will do this, that, use this, that because I want to anticipate this or that need"?

Sorry, I read your comment several times and I can't really figure you out what you are asking. Are referring to peforming R & D type work?

What if the programmer clearly explains the amount of work involved to your requirements into a working product?