Hacker News Reader

> I went from hourly, to per project, to weekly billings

I have tried all three, read all the HN favourites on why value pricing is the way; tried charging for roadmapping; and yet I come back to the most stressful of day-rate (hourly by any other name), unable to break this in 15 years of technical consulting.

Why? Because with per project billing I was losing 30-50% as client expectations were different to mine. When I added 30-50% to the prices, I didn't win the jobs. I could write a spec 80 pages long (which no client would pay for) and still there were variances which cost me.

On my current $50k+ project I've got the client to bear the risk because he's the worst client for cost overruns I've had, and it's on a time and materials system. However because he has no more money than the top range of estimates, and because he wants everything and more, I feel trapped and as stressed as if it was fixed price (which it's turning out to be).

It feels like I am missing something obvious that other developers/consultants have got. I want to price on value so I'm not stressed about every minute's productivity. My clients want fixed price so the risk is stacked on me; they won't/can't do sprints (often because their board of directors won't approve it, even if they say they see the benefits); and the projects are unique systems each time, so the estimation is not accurate.

I freelance/consult because it pays well, but this way of working sucks.

Have you tried doing a monthly retainer rate?

You come up with the SOW and say: "This will take X months provided there are no surprises or delays, at a rate of $Y per month."

> My clients want fixed price so the risk is stacked on me...

The risk should be spread evenly. If you're bearing all the risk then it's not a good relationship.

The reason I did weekly vs monthly pricing is simply because it breaks down to a "smaller" amount, visually ;) But yeah.. in essence you are just asking for a monthly retainer. Also, with weekly you don't need to worry about collecting as much in case of nonpayment, at most you'll lose a week's worth of pay.

The way I've seen a large and successful agency handle fixed bid projects was to write very detailed waterfall requirements and attach a price to that. Any scope creep meant new work with new requirements and a new price tag. The key was to break the project into smaller phases and price each phase. The detailed requirements are a contract between the two parties. They have dedicated product managers help the client determine what they want and come up with requirements.

You might also just have the wrong clients. I've found moving upmarket reduces stinginess.

It may also be you just have trouble saying no to your clients and need to work on setting boundaries with them. You may not need them as much as you think.

I freelanced for a couple years, and that was how I always did it. The contract spelled out exactly what functionality was included, and that was priced on its own. I often did projects where it was assumed that the completion of one contract would immediately start a new one, but that new one was also similarly defined and priced. This enabled iterative building out of a system while giving the client the ability to judge value of each piece. I usually focused on systems that I could define a good ROI for (replacements for existing systems with high maintenance costs or requiring lots of man-hours to operate, etc) because it's pretty easy to sell almost anything to a business if you can show them that within 2 years it will have paid for itself.

What is your change request process?

> What is your change request process?

I have done everything from formal documentation of changes, requiring pricing and sign-off for every variation, to vaguer schemes.

The change request system sucks; it loses sight of why we're building the software and turns into a war of attrition.

The issue is always they say the spec is open to interpretation and they meant this, or they expect it to work this way (which is slightly different now they see it, but in scope because every single interaction can't be specified in advance). And either way they see no reason to pay.

So it ends in arguing and bad feeling; the client has an expectation that's not met without paying more and feels it's my fault, that they're paying when they shouldn't. I've lost time and much emotional energy.

I have gone as far as to have a "What's not included" section in every contract which helps, and that if it's not mentioned specifically then to assume it's not included; but it's a non-ideal situation.

Are you not maybe specifying too much too early on?

Back when I did some freelancing gigs, the general advice I got was to spec a high level, general proposal which included all the client's requirements. Broadly. Then decide on iterables, with the spec (and timeline and effort and payment) for each iterable being done prior to commencing work on it. The key being to have a working system after each update. Sound familar ;D

The client's risk investment in you not completing the project (and them being left with some obscure code and no system) is minimised. Your risk is minimized as the client actually gets to update requirements at each iteration and you get to charge depending on implementation details for those changes. And if they feel you are taking them for a ride, they have a conpleted system up to that point in time, so have the option of looking at other developers. Which also allows you to bail as well without dropping the client with an incomplete project if its not worth it continuing.

My experiences like that went well - frequent communication kept the client informed of progress, they were able to manage adjustments (cost and time to implement), and at the end of each iterable they were left with a working system (even if rudimentary in the early versions) which they could build off of things went south.

I usually got paid more out of those, and ended up doing more work for them because of the relationship built.

> Are you not maybe specifying too much too early on?

> Back when I did some freelancing gigs, the general advice I got was to spec a high level, general proposal which included all the client's requirements. Broadly. Then decide on iterables, with the spec (and timeline and effort and payment) for each iterable being done prior to commencing work on it. The key being to have a working system after each update. Sound familar ;D

This is exactly how I want to work! The pushback I get is that the company's board of directors won't sign off on a project where the total cost isn't known.

I have explained all in your third paragraph, and even when the manager/CTO/CEO 'gets' this, the board don't. Because it's beyond their understanding as non-technical, and sounds like being taken for a ride (and I get it; if my garage did this, I would expect I was being fleeced).

This is what I need to break-through.

Ya, fair enough. It sounds like you've exhausted the paths that every waterfall developer exhausts before moving on to some kind of agile framework (ex. Scrum).

Clients don't like it as much of course, but the we can do is convince them that it fits the way that everyone works better -- nobody knows exactly what they want up front, and if they do, then they're wrong because as soon as they get to use the thing the never existed before, they'll discover things that don't feel right and they'll want to change them.

But working (and billing) in weekly Sprints seems to work very well once you've convinced your client that the framework is the right way to do it. Client want a quote, but we tell them we can't really give them any sort of estimate until we see how they work (with us). So, a two week trial period is often a good way to get that going.

> But working (and billing) in weekly Sprints seems to work very well once you've convinced your client that the framework is the right way to do it. Client want a quote, but we tell them we can't really give them any sort of estimate until we see how they work (with us). So, a two week trial period is often a good way to get that going.

I like the idea of a trial period. Get them on-board with low risk to them. As this pattern of working is exactly what I want but can't get clients to do (see my reply to your sibling commenter).

A difficulty is they invariably say the last agency/project did fixed price, so do any others they're talking to, so even if your results are good why aren't you.

They don't feel safe, and it's that safety I need to give back to them.

> It feels like I am missing something obvious

I'm not sure if you're missing something obvious ..this is HARD, I totally know what you're feeling like.

I was talking with a buddy other day ago (also a consultant); I was grumbling about how clients have "urgent" projects and then proceed to sit on the project proposal for a few weeks...

His response went something like this: "look, there are reason's why consultants are called in to work projects - and those reasons are not that they are well organized, well equipped, well funded ..etc etc". Oddly, that made me feel a bit better.

Ah, yes, the "hurry up and wait!" projects. If it makes you feel better, my 9-5 for the man is full of them too. Working all weekend to come in on Monday and find out it was all in vein is no fun.

You can somewhat combat that hurry up and wait attitude by making yourself feel more scarce. I typically say something along the lines of getting booked often and quickly so I can’t make any promises on being available after one week. This puts some pressure on them to respond within a week. In most cases if I haven’t heard back in 2-3 days they are gone for good.

When I added 30-50% to the prices, I didn't win the jobs.

That smells like a market segmentation effect where you're working in a market segment where normal is "part of how consultants make us money is by reducing their consulting fees." That's common, but not universal. The solution usually better clients. Some you will have to find (and finding good clients is harder than finding bad clients). But some existing "bad clients" will upgrade because of the relationship with you...good clients value the relationship more than price. Clients who prioritize price assume that consultants are fungible to a large degree.

Freelancing can be highly stressful and demoralizing, unless you take the steps to go into consulting or beyond. It's a ladder, just like your corporate gig, you gotta do the work to move up or suffer where you are stuck.

I have one sticking point I'd love to hear what the HN crowd does to deal with it.

I'm freelancing and I find gigs that are long-term via recruiters / LinkedIn. And never directly with companies. While the pay is high, the feeling is I'm just another employee, except temp.

How do you market your skills directly with firms, and where do you go, if you're not the 'social media broadcaster' type who's on Twitter / etc. all day? I DO have people skills, I DON'T spend any time doing presentations at tech conferences or blasting myself on Twitter / social media. Do you partner with a marketing type? Or become that type?

Outsource this to a profiler/marketer to build yourself an identity Don't work under your name but create a brand even if it's just you ;)

This sounds like a really interesting idea, have you done this yourself or seen any good examples of it?

Yes, I know companies but do that very well, but they are in France and work only in French. Distinctive features to look for : small companies (2-3 is best for their focus on you, 10 max) but it's just my opinion. Once they grow, they tend to lose their initial verve. It doesn't seem to scale well.

Can somebody recommend a person or company that they like for this task? I have a company brand, good enough customer flow to stay afloat, but extra hours I could put towards more work.

We offer cybersecurity services and due diligence for financial institutions, healthcare and acquirers, so it's a pretty specialized target market.

I think the problem is that, in the U.S., recruiters have captured that market. Since they captured it, they also capture 20-40% + of the rate because of this "added value." And I say that with the maximum possible cynicism.

How do individuals compete against recruiters? Why would this marketing person take a few grand from me, when they can be a recruiter and take 20-40% + of my rate for doing nothing but the intro?

I'm a tech copywriter and have had a couple of developers reach out to me with similar needs. It was unexpected, but it's been interesting exploring the issue with them and I'm curious if other developers are interested in chatting about it too. If that's you, then please feel free to hit me up -- email is in my profile :)

You are describing that you want to want to get a job as a contractor. So apply for a job. Companies advertise that a lot, sometimes through an agency. You can't expect get the benefits of an agency without paying the fee or doing the work yourself.

There is a ton of wisdom in this comment. Others would do well to heed your advice. My experience as a consultant and product business owner has very nearly been exactly as you’ve described.

Same here, the comment summarized all the stages we've been through.

On top of the weekly invoices, I also created "subscription" invoices, which I charge automatically instead of waiting for invoices. It really was killing me last few years. I don't even want to check last year's lost invoices...

What did you use to make a subscription invoice? Stripe? Or another platform integrated with Stripe?

I am curious how you transitioned into a product. How did you validate your product?

Freshbooks and Wave both offer repeatable invoices - I'm sure other invoicing/bookkeeping services do as well.

I "Flintstoned" my small SAAS with automated monthly Freshbooks invoices until I had the time and money to get Stripe properly integrated. It meant we could get paying customers from day one with one less programming/integration headache to worry about.

Thank you! This whole time I didn't realize Freshbooks allows you to create recurring invoices that let people save their cc details. Doh!

Not OP, but I use waveapps.com for subscription billing. It was among the lowest cost option I could find, it works well, and it produces nice invoices that you can white label. Once the customer has entered their CC, you can also process incidental charges as necessary above and beyond their subscription. Most clients don't want to deal with billing either, so this just runs the card on whatever frequency you want and allows you to run the card whenever else you need to. If someone has a better suggestion, please let me know.

I am using Stripe with a self-hosted CRM software I bought (slightly modified for other reasons, but not the payment module.)

Stripe alone can take care of it. Subscription or any type of recurring invoice system would be sufficient enough to stop collecting the check. Although, it comes with nearly 3% fee, which is fine because I see it as "what if I couldn't collect one of these invoices". That 3% really doesn't hurt much at the end of the year as long as you collected 100% of your invoices. Missing 2-3 invoices can truly hurt though.

Had did you transition from the hourly work to weekly? Why do you think your clients are more accepting of 10K for 3 weeks vs a 20K quote?

When it comes to products do you have any thoughts on competing with big players? I have a few now, I am hoping being local will get me in the door and make the client more comfortable with me than a website offering it as SaaS.

My advice for consultants / freelancers. Setting yourself up as a general company with a name goes a long way. Not as John Doe consulting. Some larger companies don't like throwing money at a self employed consultant. If you show up as Compu-Global-Hyper-Mega-Net they treat you differently. Also people skills is spot on. Even if you do have people skills, it can help a ton to have a sales guy working for you as well.

Transitioned simply by trying something different, until per project quotes succeeded. It was hard so I gave up and decided to try something else, seemed to have worked.

My projects usually last a month or two, sometimes longer. Smaller businesses with smaller teams seem a lot more accepting of weekly invoices. It becomes a line item for them, just an expense among many (this is my guess).

In terms of products, I am not qualified enough, but if I had to guess, it's best not to compete with the mega SaaS. Position differently and find a unique niche that won't necessarily make you super rich.

As for naming, that's an interesting point. I don't know if it's true as I've seen consultants go by their name and make a lot of money. Some people simply build a brand out of their name and become well known for the work they do. Sadly, I don't have a brandable name so I went with a business name. I think there is some truth to your point when it comes to being seen as a company to do business with than "hiring a consultant".

Would you mind speaking a little on your path from salary to freelance? I want to make the jump but it seems scary and I don't really have anyone to talk to about it? How are you finding work?

My start in freelancing was forced. I was laid off as part of a merger for lack of face time (fully remote, while others showed up in office so naturally they were chosen over me). It was really tough. I lived in an expensive area all of a sudden without an income. I guess the reason I did not go applying for jobs was just the sour taste that the layoff left. I felt angry, not at the company, but at myself for letting others dictate my life.

I started on Upwork. It was a bitch. Upwork is known for low quality, but I didn't have any choice. I just tried doing as best as I could for everyone I dealt with and that seemed to manifest into a 100% rating, which led to even more contacts. At one point some of the clients weren't so terrible. I think the first year I did 40k, much much lower than the salary I had, but it was enough to pay the bills. I also moved to a much more affordable area so it helped.

Having 100% rating on upwork lead to agency work. Agencies are great, if you do good work they often have a steady workload for you. You know what comes and when and can schedule more time to work on other projects, thus upping your income. If you are a developer working with an agency, this can be very rewarding if your charge your worth. I am a designer and our industry naturally caps what people think I am worth. It sucks.

At one point I was doing well enough that new clients I was taking on were willing to pay per project. It was super hard and scary, but I said bye to agency work except for 1 agency where I befriended the CEO. Per project work was really nice, but I learned quickly that if you can't sell your value (which I couldn't at the time as a "designer" and just lacked experience in this area), it can be difficult to close larger quote projects. People are just scared of large numbers. Tell someone they should pay you 50k and they run away (I am sure that other's experience may differ and people don't mind paying them that sum). I tried a bunch of things, price anchoring, huge fancy proposals.. yada yada. What happened is that I was getting burned out on huge fancy proposals and not getting anything out of them and that was the breaking point. I figured, I am done with proposals, from now on I get people on the phone, talk to them, and if they don't agree at the end of the call then I won't put any more effort. THIS WORKED.

Now the process is simple: Schedule a call, we talk, I ask you about your BUSINESS problem and offer you a business solution. No talk of design. No talk of development. What is it that is costing you money or not making you money? Let's change that.

As far as new work it's 100% referrals at the moment. However, I know that this can't last forever and at some point I will burn out (I already feel this after 3 years). My goal is a product or a product-service (have someone else do the work I offer at a reduced scope for a cheaper price). I have read about several people here on HN doing this and making a killing (by my definition). This is what I look forward to next, but it has not been easy. As a side note: if anyone is running a product service or a SaaS and started in a similar fashion, I'd love to hear from you!

I'm starting up something similar to this, low fee digital business consultancy that's at a reduced scope for quick turn around and maximum results for clients. It'd be great to connect with you! Let me know where I can contact you :-)

This is the way to do it.

The article conflates "freelancing" with "charging hourly." The problems it outlines mostly go away when you do value-based pricing, paid weekly, monthly, or even quarterly.

I found transitioning to full project billing extremely satisfying.

The main downside is not clear project requirements, scope creep and you said / I said issues.

One way I found very helpful in mitigating it is getting a prototype of the UI, with some comments about what's unseen.

Getting an "idea to prototype" thing done is not expensive in context of any 25k+ projects and gains are huge on both sides.

I much prefer hourly to day or weekly rates. When I charge a daily rate I feel I need to work a full 8 hours.

I currently use a timer app and bill my exact working hours. It's great because when the weather is nice and I want to go sailing or cycling, I just stop the timer and go.

I have a set monthly salary I want to make. If I'm on track to hit it, no pressure to work. If I'm behind, then I'll put in hours.

What's the difference between "the highly paid freelancer" and "the consultant" for you?

Not sure about the OP, but to me... The freelancer is building product on their own, or mostly so. Somebody hires them to do the majority of the project. "Hi, I need a website that does X, here's $20k to build it."

The consultant is embedded in an existing team and either building some niche portion of the product OR providing some sort of training. "Hi, I need a website that does X, we're only qualified to build subset Y, here's $20k to build the remained OR train us to build the remainder."

When I think of freelancers, I think of 3 tiers: 1: the bottom of the barrel. They will beg for anything you give them and will do it for $5, or even show you a free demo (by building out part of the project, or designing it) They will bid on every project on Upwork. My guess is 80% of Upwork falls into this category. 2: Freelancer who charges a mid-range or "market rate" or even above market rate. They can't fathom that they are worth double what they are charging. 3: The highly paid freelancer - the person who decided to double their rates and "capped out" at some high rate. This person thinks he can't go any higher, he tried, but it wasn't working. Sometimes they do really well.. like a developer charging top rate and putting in 8 hours a day or whatever realistic amount of time developers work. This freelancer can make above market salary and some are perfectly fine with it.

Then there is the consultant. The person who realized that time does not equal money, that businesses pay for value, or more importantly, they want to know how much money this is going to save/make them. The consultant charges for value, at a markup. The top of the ladder make over a mil a year, the ones still learning can make very good sums of money, but its all limited by them. If they don't do the work, the money stops. This is a great place to be, but you quickly learn that you don't want to be stuck here, unless you are the top tier consultant and you love your work and don't mind the day in day out. I have not heard of too many of these, but they usually turn into product businesses well before reaching that.

If there is one thing any aspiring freelancer needs to know is that their mind is their worst enemy. Overcome your mind and you can go a lot further. I was and still am a victim of my own mind and work on overcoming it.