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Comment by codingdave | Hacker News Reader

Freelancers have been kept on retainer for quite a long time. It sounds like the author just wasn't familiar with that business model. Which is fine - I don't want to be harsh on someone just because they had a knowledge gap - we all do. But there is more to being on retainer than just a monthly fee.

There still is often hourly estimation because the retainer frequently will be for a set number of hours, with additional hourly rates if you go over that limit. (Freelancers who offer unlimited hours get in trouble fast.) Companies therefore still triage their needs, to try to get as much done in the set hours without incurring too many additional hours.

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Retainer arrangements and subscriptions look similar but are not the same thing. A retainer is a bucket of hours sold gym-style, use-it-or-lose-it. Within those hours, the customer has a lot of flexibility with tasking their contractor (what the scope of work is, and what the scheduling and staffing are).

Subscriptions are distinctive because they include terms based on defined outcomes. You're getting X done every month (X may also be use-it-or-lose-it, but it isn't ever Y or Z), and the vendor (mostly) decides how best to accomplish X.

Retainer agreements tend to have bespoke terms; if 5 clients retain you, chances are you have at least 3 different sets of terms and 3 different scopes of work. Part of the definition of a subscription, again, is that it's the same work for everyone you sell it to.

Neither retainer freelancers nor subscription services should be charging hourly; hourly is a consulting anti-pattern.

> Neither retainer freelancers nor subscription services should be charging hourly; hourly is a consulting anti-pattern.

It's easy to say that but hard to avoid hourly. I say that as somebody who's read your threads and those of patio11 for a decade. I've run my 1-person business [1] for over 15 years and whilst I would like to break away to value pricing I'll still take money-for-time over fixed priced bids any time.

Why? Risk transfer. With fixed bid the risk and management of scope creep is on me. With hourly, on the client. And not having to micro-detail everything in the spec before it gets signed off to make sure no time sinks pop up is nice.

I don't know if the breakthrough I've never managed to escape time based billing is mindset, target audience, offering or location (UK), but I haven't made it happen.

1. https://www.mapledesign.co.uk

People have been saying this here for 10 years, and, respectfully, no, it's not hard to escape this trap. Every project we bid at Matasano had the same terms: a whole-project cost estimate (broken out in units of days or weeks, allocated to milestones), and a clause in the proposal and the SOW that said overages were billed pro-rata additional days. Customers want to see a good-faith estimate of the project cost --- every customer for every service wants that --- but in my experience with hundreds of clients, not one has ever pushed back on T&M contract structure.

Tell your clients what the project is going to cost, and then work hard not to blow past that estimate. If you go over and it's your fault, eat the overage. If you go over because the customer wasn't ready for 3 days at the calendar start of the project, bill them the overage.

Unless your clients are whackjobs, nobody is ever going to take recourse to the contract terms and the law department. Just engaging the lawyers at all will create costs that swamp the overage dollars. Your customers true recourse is simply never doing business with you again.

If you want to do straight, metered T&M, that's fine. I think it's suboptimal but cromulent. But even then, there's still no reason to ever give your clients an hourly unit of work. Just bill days.

Interesting, for larger contracts the way you bid at Matasano is how mine come out. Scoping engagement, then costs broken down as a guide.

My reading though is what you were doing was still time and materials. Sure you're billing in units of days or weeks, but as I understand it the underlying principle is the same as hourly billing: track time and charge for it. It's not linked to the value of outcomes, it's not eating up unknowns that come out and each has to be negotiated with the client ("We didn't expect $EvilCorp we're integrating with would take 2 weeks to answer every query").

In another comment you say "Time and materials billing does the opposite of keeping everyone on the same side". Can you expand on how you kept people on the same side at Matasano?

> and a clause in the proposal and the SOW that said overages were billed pro-rata additional days.

Did you have an approach that stopped each one becoming a lengthening negotiation with the client over what were true overages and which you should eat? I have had plenty of brusing conversations doing this and in my experience the client's expectation of what's "My fault" can be unreasonably wide, which is one reason for looking to other ways to price.

It absolutely was T&M, but that's not how it's sold. If you read the proposal the way ordinary humans read a proposal, skimming to the price tag, what you'd see is a price breakdown for the whole project, complete with a "total cost" as the bottom row. This isn't some magical thing Matasano came up with; my Matasano partners were from @stake, and the @stake people were previously Cambridge Technology Partners people, and those people were taught how to structure proposals by their forebears before them. Presumably Paul Revere was involved at some point.

We never had any negotiations about overages. If we were going to bill an overage, we'd tell the client, and if they told us "no", the project would presumably have stopped there. It didn't come up.

Aha thank you! Much for me to think about.

I'm not convinced a random solo consultant can get away with the same contract negotiations as an established, well-known agency, even assuming it would rational for both parties to allow it. I'd love to be convinced (and I'm all on board with billing days).

We started another company after Matasano, just a couple people, and we did a minimum billing increment of a quarter.

You're still kinda famous. If not when they hear your name, then when they do some research.

Yeah, its stated as hourly but the real deal is 8-8-8-8-8 across the board...and the manager stamping your timesheet loves this. For some reason lawyers are stuck with tracking every 15 minutes.

I think if you have a timesheet, something has gone wrong.

I often have two. But don't feel sorry for me. My salary and benefits tromp the FTEs.

Why is that?

Because when you're billing for a day, you either worked on a day or you didn't. Not working on a day you're ostensibly billing for is anomalous enough that you're going to bring it up yourself with your client. For daily billing projects, timesheets are mostly just not a thing. We had a couple customers that used them, but they were staff-aug projects.

Yeah I'm not sure I would want to offer unlimited hours to multiple clients.

I would consider it but it would have to be very repeatable and well defined and at that point, why haven’t I automated it? The posited Agency of One sounds pretty much like a beginning-stage SaaS while you’re doing things on pen and paper or a spreadsheet until you’ve figured out what you need to actually build.

Otherwise, that seems like a fast track ticket to burning out. Retainer model and selling bundles of hours is going to keep your client incentivised to not waste your time.

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