Hourly

by Todd

This is a bit of a stream-of-consciousness post. It’s not a rant, just some thinking out loud that seemed like it might resonate with others. Ergo, blog post.

So let’s talk about the almighty hour, the billable hour. Trying to make a services business run by the hour is, in a word, hard. In creative work, the hourly model is like Shiva, creating as many problems as it solves.

For clients, hourly billing seems like the only way to turn the ephemeral and mysterious into something concrete and predictable. What’s the value of a logo, a wireframe, or an elegant algorithm? That’s obviously hard to put your finger on, and measuring the time to produce them seems like a way to measure what’s being bought.

Over here on the service provider’s side, time is a practical concern not as any real measure of productivity, but as a way to make sure your bank account can keep up with your expenses. Hourly is also a way to position yourself in your market, to signal your experience and calibre. It’s a shield against indecision and endless change.

These are not small advantages. Hourly helps us justify and quantify something that clients aren’t always familiar with, giving some material to build the bridge between client and service provider interests.

So the hourly model has benefits, but working in that model can be painful. To make hourly work, you need to pretend that you can predict the unknown. How long until a good idea? How long to match the tastes of someone you barely know? Creativity is often about plumbing depths and cutting unlit paths. Yet we confidently offer estimates and quotes as if it’s all worked out to the very hour. Riiiight.

And then there’s the real difference between one hour and another. Every hour might be 60 minutes, but the value of an hour worked varies with the differences between people and teams. An hour from an experienced person can be worth 6 from one less experienced. An hour of consultation can be worth a whole day of hacking it out yourself.

Denim & Steel has an hourly rate, but we never actually make that much per hour. Instead, we aim to buy enough time to do the best job we can within the resources a client can bring. We try to watch days more than hours, and results more than minutes. But it’s not easy. We recently tried to break from the conundrum with service packages that disclose base pricing up front. We used hourly estimates internally to price them, but when it comes to talking about time we describe that in the amount of calendar time that we think is needed. Both data points help set expectations, and get away from thinking at a level of granularity that doesn’t really work.

So what do you think? Is hourly a fiction we agree to say we believe in just to get past the hard parts of budgets and expenses and the reality that creative work can be somewhat unpredictable? Is there a formula for estimating hours that keeps clients and service providers in the safe zone without surprises? Is it a fact of life, or an idea that’s worn out its welcome?

Got thoughts on this? We’d love to hear them.