[pmjordan]

the whole comment section was insisting that per-project billing is the only viable way to make money in consulting.

Generally, when someone gives you advice that's supposed to be 100% right in all cases, they either stand to gain from it personally or have no idea what they're talking about.

In this case, the difference between the two approaches is mostly a question of who ends up with what risks. My wife and I run a two-person development contracting business, and we've done projects with both approaches. Both have worked well for us, but for the type of work we tend to do, most projects would not be suitable for fixed price billing.

The reason is that most of our work consists of "deep dives" for figuring out if something is possible at all. (Or more precisely, possible within a reasonable amount of effort.) So what usually ends up happening is we'll agree on a capped research budget, and dig into the problem up to that number of days. If we find a solution before that time, great; if we find a fatal blocker before that time, well, not great but it's a result. Otherwise, we'll hopefully have found some leads to pursue in that time and can give a better estimate for how much more effort it'll take.

Maybe it's possible to do this sort of project on a value-based basis, but I certainly haven't found one that seems fair, or that a client is likely to accept. The author of the original article likes to claim that with value based pricing, interests are aligned. Well, for this sort of project, one of the parties is likely to lose out massively if you agree a fixed price up front.

And as for the author's assertion that your income is capped: you have one variable you can tweak: your rate. Charge more! We charge more than his "optimistic estimate". Sure, we're still not rolling in it, but we also don't work anywhere near 40 hours a week. And the implication that our incentive is to drag out projects to get more billable hours - well, I have a stronger incentive to make all my clients super happy so that they keep coming back for repeat business. This way, we have more requests coming in than we can feasibly accept.

Of course, only touch open ended projects for savvy clients. The nature of our particular specialty means we work with tech companies who understand the nature of big unknowns in projects.

[marfusios]

You don’t understand. $240K is not cool, $2M is cool. Good luck with hourly billing to get that kind of money. The only way to still doing what we love - software engineering (not some kind of managerial, leading, business role) is fixed price and re-selling already implemented stuff (same approach as lawyers).

[pmjordan]

Only reselling already implemented stuff is neither software engineering nor what I love.

$240k would be a highly respectable income pretty much anywhere in almost any field. In most of the world, doctors are paid less than that while routinely working night shifts and constantly making life and death decisions about their patients, and you’re seriously complaining about being paid $2k/day for fiddling about with stuff on a computer?

[zenpaul]

Good luck making $2M as a solo consultant. In order to take on projects that big and maintain your customer pipeline you almost certainly have to build a team which is what I call creating an agency.