“The practice of billing for one’s time is unethical. Billing by the hour pits the consultant against the customer. Do you really want to be in an adversarial relationship with your customers?”

Quite the opposite. Fixed prices create a more adversarial relationship. The customer will always argue that additional work was included in the original specification. And the contractor will have an incentive to do the quickest job that meets the precise terms of the specification, whether or not it will serve the customers needs.

I think you’re erroneously assuming that the contractor’s sole incentive is to get as much money from the customer for as little cost as possible. In that case, the customer may need to insist on a fixed rate for a specific set of requirements to prevent the jerkwad contractor from ripping him off. However, then the customer assumes the full risk that the specifications won’t actually meet his needs and he’ll pay for something he can’t use.

I counter, that if you suck at what you do, insist on a fixed price for meeting written specifications. Then you are entitled to your full payment even if your work is utterly useless crap.

However, I do recommend that consultants have a grasp of what they should be earning per hour and per day so that they can plan income targets and know how much and when they can start to outsource work or bring on other employees.

I created an online consulting fees calculator to help with figuring that out here:

http://www.consulting-business.com/consulting-fees-calculator.html

It was simply embarrassing to see our upper management changing their minds on a daily basis on what they wanted done or nitpicking on minute details that no one but them would notice, but would cause huge amounts of time to implement.

Needless to say, their company made huge amounts of money on what could have been a simple project.

On the other hand, it used to tick me that they often sent apprentice developers to do the work, taking an unreasonable amount of time as they were basically on the job training or reinventing the wheel and billing hourly for it.

I guess it works both ways.

If, however, you’re working in a customer space and deal with people who enjoy wasting your time, then hourly is the way to go. This really boils down to how much control you have over your time and how much control your customer has over your time.

Either way, I’m all for higher rates, as this will help drive the market up. :o)

Sorry, but that is just ridiculous. I’ve been an IT Consultant for the last 12 years. Hourly billing is the single best way to get paid properly for my skills. Fixed rates are great in some longer term situations, but for short term work, hourly is the only way to go.

You couldn’t be more wrong about billable time. I know it has been quite some time since you wrote this article so I hope that you have made the move away from billable time and embraced fixed price contracts.

The practice of billing for one’s time is unethical. Billing by the hour pits the consultant against the customer. Do you really want to be in an adversarial relationship with your customers?

I have a favorite quote from Ed Kless at Sage Software: If you suck at what you do then bill for your time.

http://kconrails.com/2010/01/15/there-are-no-cheap-ruby-on-rails-experts/

Also, I recently gave fixed bidding a try, and it burned me! It took triple the time it was supposed to. In the end, the client and I settled for 2x the original bid, but nobody was happy.

I’m new to this and wondering what “send out 10 CVs every day, and test different rates” really means. Are you saying you search the web for companies that *might* need a BA, and then send your VisualCV or resume to them with a quote of your basic rate?
Thanks!
Shannon