No one has influenced my solopreneur career more than Jonathan Stark.
Jonathan spent about fifteen years as a software developer, consultant and trainer before he went all in on one mission: getting rid of hourly billing for independent professionals. His argument is simple. Clients don’t buy your hours, they buy results. So why does finishing faster mean you earn less?
This is a tricky one to realize.
When I started consulting, I billed hourly. It looked like the reasonable, default option, and nobody questioned it. That meant negotiating hours (”I think I’ll spend 20 hours on this”), tracking them and planning my availability around how many hours I committed to the client work.
Once I started reading Jonathan, I couldn’t stop seeing the problems. Think about it - hourly billing punishes you for getting better at your job! It turns many conversations with a client into negotiations about time instead of outcomes.
Most importantly, it puts a hard ceiling on your income, because there are only so many hours in a week.
So I decided to stop. I don’t do hourly for new projects anymore. I either do fixed-price projects or monthly advisory retainers. Fixed price works great when the scope is clear, like a greenfield project with clear requirements. Or something smaller, like an audit, a migration, a performance investigation. Retainers work great when a client needs ongoing access to my expertise, but can’t say upfront what exactly they’ll need. In both cases, the client knows exactly what they’ll pay, and I’m incentivized to do the best work as efficiently as I can. Everyone wins.
As usual, the answer is not binary, and moving away from hourly takes practice. You need to learn how to scope, how to price, and how to have the right sales conversations.
One thing that was really hard for me to understand: what if I scoped and estimated the project incorrectly and it takes me a while to implement? Or, more importantly, will I have enough projects to work on? It sounds funny, but for some people having a “predictable” hourly engagement feels more stable than delivering several fixed-price projects. But then it clicked: if you truly niche down and specialize, you can charge more. Which means, you don’t always need to be working on projects: 3-4 successful projects a year can be all you need to hit your revenue goals.
It gets even better with retainers, but it’s a topic for another day.
Where to Start
Start with the book: Hourly Billing Is Nuts. It’s short, and it lays out the whole case against hourly billing and what to do instead.
Then subscribe to Jonathan’s daily newsletter on pricing and positioning. I’ve been reading it for a while now, and it’s one of the very few emails I never skip.
Finally, the podcast. Ditching Hourly is Jonathan’s solo podcast “about the insanity of trading time for money”. It’s packed with practical advice and interviews with people who made the switch.
If you’re a software engineer thinking about going solo, or you already did and you still bill hourly, don’t assume that hourly should be the default!