Thoughts on Hourly Pricing

Couple of months ago I worked on an iPad application for a client. I cannot really discuss the technical details of the application but I can surely elaborate on the pricing models behind the application. 

As with most of the iOS developers I went with the hourly pricing model. I always thought hourly pricing model is the most financially viable pricing model of developers. The simplicity of the hourly models creates an illusion of profitability which is not uncovered by developers. 

I estimated the project would take 40 hours to complete. Let's say I charged X per hour that means 40 times X = revenue. But it also means if I complete the whole project in 20 hours then my profile will be half. So, in order to make the most money I have to deliberately ensure that I do not finish the project early even when it is possible

Don't worry I don't that bullshit! I actually completed the project in 20 hours meaning 20 hours under budget and delivered it on time. So, as you can see hourly pricing limits you in your income. First you have fixed hours in a day and in some scenarios you can finish the work early. 

At least finishing work early is good for your client. The other side of the equation is finishing the work late which is bad for you and your client. The client will be unhappy because you as a developer estimated the project wrong. And you as a developer will also be unhappy because now because of your bad estimate you have created a tension between yourself and the client.

Lucky for me I made my client happy by finishing the job early!

If you are a freelancer then think twice about charging hourly! A good alternative is value based pricing which I will cover in the future post!