June 7, 2024

The (Circular) Argument For Hourly Billing

If you bill by the hour, you really have no financial incentive to control scope creep.

In fact...

You have a very clear and direct financial incentive to welcome, if not encourage, scope creep.

Sure, you might have emotional or intellectual or philosophical incentives that encourage you to minimize scope creep.

But if you’re having a tight month (or quarter? or year?!), the financial incentives are probably going to win out.

So here’s what’s ironic about this...

Hourly billing creates a circular argument FOR hourly billing!

It goes something like this:

1. You bill by the hour.
2. Hourly billing encourages scope creep.
3. Therefore, you experience scope creep on virtually every project.
4. The amount of scope creep is unpredictable and often quite extreme.
5. You point to extreme examples of scope creep as the reason you could never give fixed prices.
6. Back to 1.

Do you see?

The reason you bill by the hour is because of scope creep...

...and the reason you experience scope creep is that you bill by the hour!

IT’S A VICIOUS CYCLE!

How do you break the cycle?

By starting to give fixed prices.

The NANOSECOND you give a fixed price, you will FEEL a powerful financial incentive to FINALLY get good at minimizing scope creep.

And guess what?

You’ll get good at it real quick.

Yours,

—J

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