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Comment by bmelton | Hacker News Reader

Billing by the hour is the only effective way I have found to eliminate scope creep. Being able to say "Well, sure, I CAN do that, but it's going to cost an additional 4-6 hours" is simply the easiest (and most well received) method of indicating that they are asking for something not initially agreed to.

Obviously, it helps to have a contract/requirements documentation/specification/etc., to point to, but it's rare that you run into a document detailed enough to cover nuances like whether or not this element should be blue or light blue after clicked upon.

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If you billed fixed rate and the client changes the requirements, then you change the fixed rate.

Say you estimate the cost at $10,000 and they want you to make a change, you say, "Okay, but this change wasn't included in the $10,000 so we will have to estimate how much the change will cost and add it to the bill. If you want us to do that, let us know."

This is why you have to outline the requirements before you do a fixed bid.

Instead of saying it's going to take 4-6 more hours, you say it's going to cost $400-600 more dollars, assuming you estimate at $100/hr. If it really takes you 1 hour, then you still make $400-600, but it only takes an hour so your hourly rate just went from $100 an hour to at least $400 an hour.

If you're a highly productive programmer and use the right tools, then a fixed bid can come out in your favor if you estimate projects using the hourly rates and estimates that not so productive programmers use.

'Say you estimate the cost at $10,000 and they want you to make a change, you say, "Okay, but this change wasn't included in the $10,000 so we will have to estimate how much the change will cost and add it to the bill. If you want us to do that, let us know."'

Sometimes it's really that simple. Other times, you end up debating whether something is a 'change', or 'clarification', or some replacement, or whatever.

The upside of fixed bid is that you can do quite well when the process is well-defined and everyone is reasonable. The upside of hourly is that you get to offload assorted issues (i.e. prolonged requirements gathering, change requests, and ad-hoc requirements finessing) and focus on the work.

For every person I hear advocate fixed-bid, I hear another advocation hourly, and each swears experience is on their side.

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