

Productivity and Price - mattm
http://mattmccormick.ca/2010/03/14/productivity-and-price/

======
tptacek
Your freelance rate should generally be drastically higher than your salary
rate expressed hourly even if you aren't especially productive. You're
covering self-employment tax, you pay all your own benefits, and you offer
scheduling flexibility full-timers don't and, in exchange, shoulder a huge
amount of risk.

You don't need to be a technical person to understand why a former employee
would charge 2x their salary freelance. Paying the original straight salary
rate would be a total rip-off.

~~~
MaysonL
Rule of thumb: take the annual income you would like to get as a full-time
freelance, divide by 100 for a daily rate.

------
_delirium
It's a somewhat controversial practice, but one solution many people use is to
quote a lower hourly rate, but bill hours based more on a guess of what
"normal" hours for the work would be (minus a percentage to make yourself look
extra fast), instead of how long it actually took you.

So if the customer thinks some job will take 10 hours, but you can actually do
it in 1 hour, instead of trying to convince them that $5X/hr is a great rate
given your productivity, just bill them for 5 hours at $X/hr. They'll still
feel like they got a great deal, because they were expecting to pay for 10 hrs
for the job.

~~~
jackowayed
I was under the impression that that was fraud.

~~~
techiferous
Yes, you want to keep things open and honest at all times. In the case
mentioned above, either quote a fixed price or quote an hourly rate and bill
for _actual_ hours worked.

------
jackowayed
> _I don’t blame non-technical managers for not knowing this stuff._

So if you hire an electrician, and he also doesn't know how to do his job and
ends up starting a fire and burning your house down, do you not blame him
either?

A manager's job is to manage programmers. If he doesn't understand important
principles like, "there's so much variation in programmer productivity that,
if you know this guy is really good, it might be worth it to pay him 5x as
much as the other guy we're considering", he doesn't know how to do his job
effectively. Blame him.

~~~
fnid2
In the case you describe, I think the author of the post would say he wouldn't
blame you for not knowing the electrician would burn your house down, because
in your case, you, the home owner, would be equivalent to the programmer
manager and the electrician would be the programmer.

~~~
mattm
Great analogy! I wish I had thought of that.

------
ct
Not all freelancers are 2x better than employees. Most contractors we get
can't cut code if their life depended on it, and usually make a mess of things
and then leave. I've really yet to meet a good contractor.

Also this isn't to say all employees are better than the
contractors/freelancers we get as obviously there are some duds that get
through. But in general that's how it is. Maybe it's because they better
understand how things work than a newer person coming in does, and perhaps
overtime the freelancer/contractor might do better...

------
gte910h
We do fixed fee work at my iPhone/embedded dev shop. One reason why is: Hourly
rates tell you _nothing_ about cost. Programmers vary unbelievably much per
hour. We'll do hourly after the first contract, but in general, not for the
first one.

------
postfuturist
I don't understand the whole "well known" idea of a 10x productivity
difference between best and worst programmers. It gets even more confusing
when he claims that some developers have negative productivity. Maybe the
productivity difference is -10x. One really great programmer can overcome the
damage done by 10 awful programmers. Or maybe we can just not pretend that
programmer productivity can be described with numbers at all.

