Don't charge for your time if you can negotiate a better arrangement. Instead attach prices to specific deliverables. Ideally the prices have some relationship to the business value.

You should focus on adding business value and how to attach fair prices for delivering that value, in concrete terms. Hours spent at a keyboard, or lines of code, do not describe anything of value to a business.

You can ask the customer to attach a value to deliverables and then decide if you can profitably deliver. Structuring projects to support that means you and the customer have to break the tasks down into well-defined steps with clear deliverables, something freelancers should do in any case. It also means getting the customer to think about business value. You should also consider cost over time (i.e. is the customer losing money because of a bug or missing requirement), and risk to the business.

Freelancers too often either accept a price the customer attaches to a project (based on what?), or guess at the time required and multiply by the desired rate. No one specifies the project in detailed steps with clear deliverables and a definition of "done" for each stage. As a result the freelancer and the customer will conflict over schedule and budget, usually well into the project.

For skilled freelancers with a solid reputations "a few hundred of dollars per hour" doesn't describe a "crazy rate."

> Don't charge for your time if you can negotiate a better arrangement.

Charging for time makes perfect sense in some cases, though. If you're working for a pointless startup that is likely never going to be profitable (or "exit" while unprofitable), you can't express your rate in terms of business value because, well, there isn't any.

I mean, you may think rightly that there’s no business value but it is the customer’s estimate of business value you care about, not yours, because you want to gauge what it is in order to estimate how big a fraction of that number you can extract as your share. You’ll get paid long, long before they fail, sell, or IPO!

Yes, sometimes you sell your expertise and experience, with vague goals, or no goals, and no defined deliverables. I call that consulting, and would negotiate a retainer rather than hourly billing. But sometimes you have to go with hourly. Some customers don't have the internal organization or focus to work out anything better than that.

Because it comes up with startups specifically, I wouldn't accept equity in lieu of pay. If you strongly believe in the startup and the possibility of success, that might make sense, but as a gamble rather than a predictable income.

> Freelancers too often either accept a price the customer attaches to a project (based on what?)

> You should focus on adding business value and how to attach fair prices for delivering that value, in concrete terms.

Based on what? I'm not a business analyst. I have no idea how much business value a particular project could be worth to my client.

You talk to the customer. If the customer doesn't have a budget or a price range based on value to the business, red flag. The customer should have some idea what they expect to make (additional revenue) or lose (costs or risk) before they start asking for bids or looking for a freelancer. I just ask, "What is this worth to your business?" or "How much is this bug/missing feature costing you?" If they don't know or won't say I probably don't want the gig.

Sometimes the customer needs help identifying the business value, costs, and risks. A successful freelancer has to do some analysis, business and technical. Otherwise they are just selling their time for money as a temporary employee.

I wish there was a small course on this on how to navigate this.

You need domain expertise to do useful business analysis. Sometimes the customer can explain their business in sufficient detail, sometimes they can't, or the business domain is sufficiently complicated that you can't just pick it up. I don't know any good way to get domain expertise other than on the job.

One thing you can do in a programming role is to take an active interest in how the business works. Talk to people in other departments, ask questions. Early in my career I had to "cross training," which meant shadowing or even actually doing other jobs so I could see how the business works. I not only write code, I can operate a fork lift, thanks to cross training.

Don’t change the deal after the fact; next time figure this out upfront and sell the task for value (fixed price) instead of hours and don’t mention the time you will spend. Practice in front of a mirror to look like things are going to be pretty rough for this task and say things like ‘clearing your agenda’ etc even though you know it’s going to take you only a few hours. After they sign, they signed for value, not hours, so you don’t owe them any explanation why they paid 20k for 2 days work. I personally, if it’s not urgent (urgent has a cost multiplier!), wait 3 weeks before starting so they won’t ask that question anyway.

I round down because dishonesty hurts me more than them.

Most of the time, my clients ask me to pad my hours, to charge for things like driving to a meeting or times that I'm just reading a book, stuck on a project.

There's the clients who will try to take advantage of you and there's the ones who love being generous. If you're generous with people you work with, you end up working with the people who would be generous to you.

10 years ago, a task could've taken me an hour. Since I was learning, I probably charged $15 an hour to do it.

Today, that same task might take me 5 minutes to do and I'll charge $50 to do it.

Why? 10 years ago I was learning how to do it. Today, I know how to do it ;)

I could spend time watching a YouTube video for how to install a bathroom sink. It would probably take me 2 to 5 hours to complete the task. However, I have a handyman who I hire and it takes him about an hour to do it and he might charge me $150 for the installation. 2 to 5 hours and I might do it wrong. Or $150 for my guy to do it in about an hour?

You pay for the professionalism and the expertise.

I wouldn't charge less because you did it quicker, when on the other hand you would probably not charge more if something took you longer because you had to fix a bug or something with a library you are using. I think if they get what they need all is good.

If a client saves 4 times what you charged, then that isn't too crazy. You should capture ALL of the value right?

And some companies like Google capture that kind of ratio from all of their employees!

I bill based on the value of the deliverable. Billing by the hour just sets you up for conflict and micromanagement. Bill for what you deliver. If it takes you forever, that is on you. If you get it done in no time, you get good money for having the skills to deliver.

How do you determine the worth of what you're delivering? Doesn't that require having some knowledge of your client's business?

Yes, it does. Typically I gain that from talking to the client beforehand. I'll do a free consultation to understand what they are looking for, what type of solution might solve their problems, etc, and make proposals from there.

And often, gaining the correct understanding is a project in and of itself. That is really what many consultants do - they research problems, analyze the status quo, propose solutions and plans, and charge a fee for producing a report that includes all the results. Then someone else actually does the work.

As a freelancer, you want your clients to recoup their investment in you many times over. Generally, 4x is the very minimum you should aim for, give the friction and effort in hiring you in the first place.

So I don't think you should've charged more in this instance.

Agreed. 4x is not a lot. Generally when you buy something at the store, it's about 8x the price from the factory. Tech tends to lean towards 10x the cost.

I work in a factory. 8x margins would be nice but we don't come close to that. Even before you factor in wages.

It's only a small job, charge what was agreed and hope that by demonstrating value and service they come back at some point for more larger ones.

Do this enough times and after a while you will have a steady stream of work from customers that you can work with on the basis of trust.

PS : You say "your code saved them 4 times...", but sounds like it was their idea, so they could have got anyone to do it. Remember that, you should be grateful for the work.

most of the mid tier freelancers I know inflate the hours they worked on paper... I Its immoral no question, yet the client is happy with a lower hourly rate and value is still created on both ends.

> most of the mid tier freelancers I know inflate the hours they worked on paper... I Its immoral no question

Just to be a little argumentative, I'd like to point out that software estimation is very hard.

You might grossly overestimate the effort for Project X with a client and end up charging a few more hours than you physically coded, but you might grossly underestimate the work for Project Y and end up eating a bunch of hours to keep the client happy.

Is overcharging for Project X but undercharging for Project Y, and basically keeping things in balance and fair that unreasonable?

This is my domain - I run a website for freelancers to share their hourly and project level earnings, kinda like a levels.fyi or a glassdoor but for freelancers.

In my experience collecting this kind of information, it is actually in the interest of freelancers to charge hourly. Far too often, with project level quotes, there is a scope increase, and in the end, the hourly rate is way less than your actual hourly rate. Not always, but very, very common. It only is in your favor if the project itself is actually very simple, you know it will for sure take you x amount of hours.

I wouldn't lie about how much time you spent doing something, either. But there is some nuance there. It's not like you can work for 2 hours and then bill for 8. But if you work for 10 minutes, you can bill for the hour. If you work for 2 hours 10 minutes, you can bill for 3. This is what I tell people working for me, but YMMV.

You would go in fixed price in that case as no one is going to accept 2k/hr. But if you say it’s 16k (and will spend 8 hours, but they don’t know), it is fine.

> again, we are so far off as engineers and we are clueless regarding negotiation and deal making.

The street cleaners or workers at McDonals are even more clueless then. Or, it's supply and demand.

lawyer has a moat with license and degree, does not translate to software unless you work in very specific areas

also software contracts are generally not for 1 or 2 hours in total. if you NEED and get someone to consult on your code for 1 or 2 hours the rate would be astronomical too.

law degree or CS degree no difference

maybe we need a license that will end all leetcode BS

you are wrong that lawyers only work a few hours on a case. they work hundreds of hours on reasonably sized cases if not thousands and the rate is the same

you dont need CS degree to be employed as software engineer or consult, you need law degree / license or what have you in US or anywhere else to practice law

never said lawyers work only 1 or 2 hours on a case, but still imho lawyers consulting for 1 hour is much more common than software developers consulting for 1 hour.