May 27, 2021
Hourly Billing vs Specialization
Alice and Bob run a little web shop.
They are both full stack web developers.
It takes Alice 3 hours to spin up a new web server and build a landing page.
It takes Bob 3 hours to spin up a new web server and build a landing page.
Alice is better at the server stuff.
It only takes her 1 hour to spin up a new web server.
And Bob is better at the landing page stuff.
It only takes him 1 hour to build a landing page.
If Alice and Bob had to spin up two web servers and build two landing pages, they could each do both tasks and it would take a total of 6 hours.
Alice could spin up both web servers and Bob could build both landing pages, and it would take a total of 4 hours.
Alice and Bob could specialize internally so that Alice did all the backend stuff and Bob did all the frontend stuff.
But whether this is attractive depends on their business model.
- If they bill for their time, they will be financially incentivized to do things the unspecialized slower way
- If they don’t bill for their time, they will be financially incentivized to do things the specialized faster way
Which way do you think is better?