[HN Gopher] The "agencies of one" storm is coming
___________________________________________________________________
The "agencies of one" storm is coming
Author : elazzabi_
Score : 140 points
Date : 2022-03-04 15:47 UTC (7 hours ago)
(HTM) web link (elazzabi.com)
(TXT) w3m dump (elazzabi.com)
| krm01 wrote:
| We aren't an agency of one (but three) and have been doing this
| for many years. It's been very helpful for both companies and
| ourselves. Let me explain:
|
| We niched down to helping B2B software teams design better
| products (UI/UX). [1]
|
| That focus helped us get really good at tackling design problems
| for these companies super effeciently.
|
| Companies then benefit from just plugging us into their workflow
| and hit the ground running.
|
| In the end, we as designers get to focus on what we love doing
| without the hassle of classical agencies (networking, endless
| prospecting). So less time is wasted doing things we hate.
|
| And companies benefit from a more economic offering.
|
| Why more economic?
|
| Because we structure our business like a SaaS, our marketing is
| also structured like a SaaS. Clients find us, we don't chase
| them.
|
| The reason classic agencies are super expensive is because they
| spend many unpaid hours looking for projects. Then when they have
| one, the client gets charged a premium to cover for the
| previously unpaid hours.
|
| A subscription model and treating the agency like a SaaS is more
| fair IMHO for both parties.
|
| [1] https://fairpixels.pro
| candiddevmike wrote:
| A subscription model for consulting sounds like a salaried
| employee with extra steps.
| rubidium wrote:
| Except canceling a subscription is easy (for both parties!).
| Firing an employee is harder. And finance treats them
| differently.
| ghaff wrote:
| You also have more than one client. If you really are
| consulting for just one company, you probably are legally
| an employee.
| brtkdotse wrote:
| And (at least in EU) double take-home money. Easily.
| michaelt wrote:
| What if my medium enterprise needs 15 minutes of translate-
| this-to-french services every day, and hiring someone for 15
| minutes per day isn't really a thing?
| mmaunder wrote:
| This is a natural step in business growth: realizing that
| recurring revenue is recurring, and then productizing formerly
| bespoke work to benefit from economies of scale.
|
| It is when a contractor becomes a business.
| al2o3cr wrote:
| Re: the example - an "agency of one" having a $1m year on
| $2499/mo plans means 400 client-months, or more than 33 clients a
| month every month.
|
| "Unlimited requests" for 33 simultaneous clients seems...
| unreasonable
| robertlagrant wrote:
| Compared to a day rate contractor, $2499/mo is very little, so
| if you have bitty requests rather than a need for a full time
| staff member, your "unlimited" could easily be not very much,
| but still better than finding someone to do your on and off
| work.
| marcus_holmes wrote:
| Gym model. Gyms routinely sign up more people than they have
| capacity for, knowing that most people will go for the first
| few weeks, and then stop.
|
| I bet there's a normal distribution for the work that sees new
| clients creating 90% of the workload, fading down towards zero
| as they age.
| janci wrote:
| But who pays $2500/month for nothing?
| lgas wrote:
| Agencies (even of one) also get economies of scale that gyms
| don't. You have templates, pre-built components, domain
| specific knowledge of how to handle common problems, etc.
| conductr wrote:
| You also have subcontractors that you can farm stuff out to
| or help when volume surges. I think the "of one" is likely
| not always true.
| abeyer wrote:
| From what I've seen, it's pretty universal for contracts
| to individual freelancers like this to have an explicit
| "no subs" clause or at least require prior approval of
| specific subcontractors. I guess you could lie, or try to
| negotiate your way out of it in some cases... but I
| wouldn't count on that at scale.
| lupire wrote:
| Gyms have machines, and personal trainers have basic
| starter programs.
| sunir wrote:
| I don't know how DesignJoy works. I can say that a common model
| in this circumstance is the person is a salesperson who
| outsources the rest of the operation to a network of
| subcontractors, including project management, AE, and
| fulfillment.
|
| Sometimes this is called a "network agency".
| gingericha wrote:
| I dug a bit deeper. Looks like it's truly a "agency of one"
| in that he doesn't outsource his work. Rather, the customers
| are given access to a queue (that they can prioritize) where
| only one item in the queue is actively being worked on at a
| time.
| Taylor_OD wrote:
| Right. But you likely end up with most of these clients being
| pretty dormant and a few, or the new ones, being needy. If any
| given one is too needy then you cut them.
|
| In practice many companies have a similar model they just dont
| say it. I mean technically as a dev I'm going to make as many
| revisions to my code as is requested and I get paid the same
| amount at the end of the month. My team just knows if its 500
| revisions then there are probably some issues with the asks or
| my code.
| moralestapia wrote:
| I still find it very hard to believe that this guy is handling
| everything by himself.
| brimble wrote:
| Sole employee![0]
|
| [0] (but sub-contracts work out extensively)
|
| Just about guarantee that's the situation.
| zelon88 wrote:
| Well maybe if MSPs didn't do such a bad job and leave so much low
| hanging fruit.
| tptacek wrote:
| My big pushback on this is not that it's hard to be an "agency of
| one" (it's easier than you think), but that it's hard to _stay_
| an "agency of one" --- the business model work this article
| talks overlaps almost perfectly with the work it takes to scale a
| consultancy to multiple people delivering.
| webmaven wrote:
| This isn't as new as it seems. Agencies (including "agencies of
| one") have been doing work on retainer for as long as there have
| been agencies.
|
| The retainer model may be more common among legal firms than
| design agencies (largely because clients imagine their design
| needs are occasional or episodic rather than continuous), but it
| has absolutely been used for design.
| ypeterholmes wrote:
| Exactly. And I'd add one note- many businesses can't afford a
| "subscription" for thousands of dollars a month.
| WJW wrote:
| How do these businesses afford employees then? Surely a
| normal employer-employee relationship is even more
| subscription-like than a freelancer on retainer.
| oldstrangers wrote:
| This is pretty funny to me. I just built https://gloutir.com,
| essentially a micro agency that's just ... myself.
|
| I realized working for large agencies that I'm already the person
| doing all the work, so why not get compensated accordingly? It
| was also amazing to me the amount of outsourcing that happens at
| an agency, most of them really don't have inhouse designers or
| developers (regardless of their massive size).
| lancesells wrote:
| Beautiful site but I think you're kind of only talking about
| yourself. I would address the problem points companies have and
| talk about them. In a sense your are speaking in abstracts.
| oldstrangers wrote:
| Fair points. I think the main pain points companies have,
| that I touch on, are turnaround times, cost and creative
| ability. I could lay out those ideas in an easier to consume
| format instead of just large paragraphs though.
| fartcannon wrote:
| This is how a great number of infrastructure P3 projects are
| run. One professional engineer employed by a massive consulting
| firm signing off on the work of 50 low paid overseas designers.
| That one engineer will have 4 or 5 bosses and be responsible
| for as many huge infrastructure projects.
|
| The leaders of these companies are well connected charismatic
| used car salesmen.
| soared wrote:
| Stunning website! All you need is a few client logos/previous
| projects and I'd be convinced.
| bendbro wrote:
| That website is beautiful
| manmal wrote:
| The copy is mostly talking about themselves though, and
| little about how they are helping the customer achieve X.
| oldstrangers wrote:
| Not a copy writer, but wanted to highlight the shortcomings
| of traditional agencies. Also felt compelled to oversell
| what we do / who we are since I can't showcase most of my
| portfolio that's tied to existing agencies.
|
| Something to consider though.
| wooque wrote:
| I like the aesthetics
| hardwaresofton wrote:
| Productized Consulting, for the SaaS age.
| stuaxo wrote:
| This is what is called contracting in the UK, as far as I can
| tell ?
| mathgladiator wrote:
| I'm very happy about this.
|
| I'm building a company as a solo engineer right now, and I've
| been thinking a lot about growth in terms of firepower. I've
| decided to not anyone for a long time.
|
| Part of the reason is that I hate being an employee, and I don't
| want to subject anyone to that: https://www.adama-
| platform.com/company.html
|
| Instead, my bias is to find free people that enjoy their craft,
| and then use a waterfall model for various efforts.
| groby_b wrote:
| Uhuh. Except, we call that a retainer? It's not new at all?
|
| Of course, this is better - there will be of course no sub-
| contracting. No siree, won't be seen. And nobody is ever going to
| slow-roll "unlimited". Or phone it in. Not at all. And of course
| there will be no client ever who would abuse an "unlimited"
| contract and have you work 120 hours a week.
|
| Oh. Wait. Yes, there will, and it'll be just like it's now. There
| will be people you build a trust relationship with, and they'll
| get the juicier deals - _because you trust them_. They 'll scale
| up, because they'll be asked more. And presto one-two-three you
| have an agency.
|
| Yes, it's a slightly different billing model. And it's more
| conducive to a "stardom"/"free agent" approach, but that also
| means it will only work for people at the top of the game - who
| don't want to scale out and make more money that way.
| moonbug wrote:
| sounds terrible.
| reincarnate0x14 wrote:
| Differing industries are often experience these cyclical
| inversions at different rates. At the moment there has been a
| trend in industrial power away from single huge projects and more
| towards managed services models, and I suspect a lot of that is
| down to accountants finding fun new ways to capitalize the costs.
|
| As someone who helped launched such a service, it's nice for me
| because the revenue is reliable, but I suspect both our services
| and contractor rates are much, much higher than what this is
| looking at.
|
| It's possibly more in line with the "small art design" markets in
| which you can hire a graphic designer or musician or whatever out
| of the global south that is doing solid work for a fraction of
| what a more developed country agency would charge. Which is great
| for everyone except the existing freelancers in said developed
| countries.
| krasotkin wrote:
| I romanticize doing something like this, but my lack of
| experience in sales and lack of knowledge in general business
| dealings prevent me from going at it alone. I'd like a partner
| who complements my skill set. Reiterating another commenter's
| point, being on call 24/7 doesn't sound fun either.
| jollybean wrote:
| Actually no. No company wants to deal with 100's of different
| agencies with different terms, and it's unlikely that someone out
| there is doing 'revisions etc' i.e. actual work and making $1M,
| there's some pricing misinformation or someone is selling some
| kind of service. Certainly it's not a template.
|
| Companies offering SaaS where there's very low friction - yes.
| But agencies like that, unlikely.
|
| I'm already in this boat the last thing we want is every single
| person to be on different terms.
| karaterobot wrote:
| If DesignJoy is making $1M a year selling $2500-$3000 month
| subscriptions, and there's only one person doing the work, then
| he's got around 30 clients for whom he is doing "unlimited" work
| every month.
|
| As a contractor, I once had 9 ongoing projects for about 2 weeks,
| and that was an insane amount of work and context juggling.
| Handling 30 _active_ clients for a year, let alone a career,
| seems impossible.
|
| So either the clients aren't asking for much (which is most
| likely) or I'm missing something. I assume many bigger companies
| would happily replace a staff member, or a staff member's
| valuable time, with a ~30k/year contractor. Critically, these
| companies wouldn't feel the need to "get their money's worth" by
| keeping the guy busy every day. However, the smaller companies
| most freelancers see as their bread and butter are more cost
| sensitive, and will nickel and dime you as much as possible.
|
| Are there enough big, monied companies to constitute a "storm",
| which I take to mean a shift in the business model for
| freelancers and boutique contractors? I dunno about that. I'd
| guess no, offhand.
|
| Seems like DesignJoy has create a neat niche, which is awesome
| for him! I don't think it scales to the "disruption" level as
| this article implies.
| mejutoco wrote:
| IMO some people have an unhealthy need to find the best deal
| possible (usually the cheapest), even if it takes so much time
| it is not worth it.
|
| The same way that some public contractors offer the cheapest
| rate knowing that it will be inflated, or that low-cost
| airlines sells you the cheapest ticket, later adding extra
| luggage, food, and healthy credit card processing fees, a
| strategy is to give these people what they want.
|
| I could believe after they have their unlimited service, a lot
| of the customers do not make use of it. In many of these cases
| the decision making at the client might even be the bottleneck.
| paulcole wrote:
| Until proven otherwise I'll assume any agency-of-1 will end up
| outsourcing to contractors at some point.
| davidgh wrote:
| You mean, become a typical agency?
| julienfr112 wrote:
| And goodby quality
| datavirtue wrote:
| Winner!
| jonwinstanley wrote:
| Which, if done right could be very profitable
| autokad wrote:
| if you look at the security space, this is exactly what
| cloudtrike is, or at least is aiming for. They want to do your
| SIRT, your red teaming, your malware collection, etc etc.
|
| Then you got microsoft with teams, office, and such trying to
| be the agency of one for your collaboration needs.
|
| Google is fighting to be your one stop shop for advertising.
|
| I do agree we are moving towards agencies of one.
| majormajor wrote:
| The "one" in the article means _one person_ doing all the
| work. Not a big org providing SAAS or such like MS /Google.
|
| I don't think it would work for something like software,
| where the last 10% takes 90% of the time. Maybe you could do
| it for prototypes, but do any companies really need a
| "constant prototype" contractor?
| autokad wrote:
| One person doing all the work and needs of a project does
| happen, but its rare. I would just be cheaper to hire
| someone full time, so this usually happens in specialty
| software where its hard to keep hiring head count to do it.
|
| > I don't think it would work for something like software
|
| Except that it happens all the time. its fairly prevalent.
|
| > Maybe you could do it for prototypes, but do any
| companies really need a "constant prototype"
|
| Absolutely.
| mikewarot wrote:
| Elsewhere on the web, he explains his business model:
|
| "There seems to be some correlation between size of the company
| and the quantity of their needs. The smaller they are, the more
| needs they have. The opposite is true as well. So yes, many
| clients pay $2k+ per month and may use the service once or
| twice a month, equating to under an hour's worth of work."
|
| Source: https://www.indiehackers.com/post/designjoy-
| crosses-70k-mrr-...
| CPLX wrote:
| > This is just freelancing! you might say, but it's not.
|
| Yes it is.
| klyrs wrote:
| > Agencies of one say things like: Get
| unlimited requests and revisions, source files included, for
| $2,499/m.
|
| Okay, you can say that, but how does a single person satisfy
| "unlimited" requests and revisions? Sounds like a recipe for
| rapid burnout and dissatisfied customers, to me.
| macinjosh wrote:
| The same way Verizon promises unlimited data. Most customers
| don't maximize usage and in the fine print there is probably
| some hard limit or exceptions for what they feel is abuse.
| burkaman wrote:
| > Is it really unlimited requests?
|
| > Yes! Once subscribed, you're able to add as many design
| requests to your queue as you'd like, and they will delivered
| one by one.
|
| You can make as many requests as you want, but it doesn't seem
| like he makes any guarantee as to how fast he'll get to them.
|
| > Because each and every request is different, it's hard to
| guarantee anything here but my general rule of thumb for a
| typical request is two business days.
|
| - https://intercom.help/designjoy/en/articles/5509274-how-
| fast...
| jsdwarf wrote:
| His offer seems like those 19,99$ /month discount gyms that
| are open 24/7. you can access them all the time but have no
| guarantee to complete your workout in 1hr due to the large
| amount of people. Not sure if that works for deadline driven
| businesses.
| ghaff wrote:
| I would not use the term "unlimited" but, depending upon the
| nature of the work, it can be perfectly reasonable to have a
| subscription without an explicit cap. When I was an industry
| analyst at a very small firm we worked on that basis (with
| adders for certain discrete projects--consulting days, posting
| rights for research, etc.). It was never a problem. Frankly,
| getting big companies to get their acts together enough to
| actually do inquiries and things like that so they got value
| from us was a bigger issue than them being a constant time
| suck.
| jsmith99 wrote:
| They can always rate limit by taking a day or two to respond to
| each email or revision request. That creates a limit of perhaps
| 20 interactions a month.
| brtkdotse wrote:
| In the same way a buffet satisfies "unlimited" fill-ups.
| datavirtue wrote:
| You can outsource all of the work to Ukraine or India.
| smilespray wrote:
| I've worked with several highly competent Ukranian devs, but
| I think most of them have other things on their mind right
| now.
| munificent wrote:
| Personally, I wouldn't frame things this way, but one way to
| manage that sustainably is to observe that you can offer
| limited _requests_ without promising any particular _response
| time_.
|
| As the number of requests increases, the latency of a response
| will go up. If a client needs a response in order to evaluate
| it for the next request, this will naturally lower the total
| number of requests. Also, clients will at some point realize
| they get where they want faster (i.e. overall throughput) if
| they are more parsimonious with their requests.
|
| In practice, healthy relationships and good faith clients and
| agents are probably sufficient for this to work out.
| tedmcory77 wrote:
| The way many handle this is you get X requests a day for new
| things, revisions, etc.
| klyrs wrote:
| Don't call that unlimited. It's limited.
| kfarr wrote:
| Agreed it sounds more like 30 updates per month :)
| tut-urut-utut wrote:
| If big corps can call limited things unlimited, why now
| "agencies of one"?
|
| I mean, it is unlimited, within a reasonable use, and the
| agency is the one to define what is reasonable use and what
| is not.
| klyrs wrote:
| It's dishonest. Don't be dishonest just because you saw
| somebody else do it first.
| adrianN wrote:
| Unless it's illegal, the incentives probably force you to
| do such things if you want to be competitive. Free
| markets suck for such things.
| klyrs wrote:
| My personal integrity is a higher bar than mere legality.
| I realize that I may be in a minority with that attitude
| in startup culture.
| justin66 wrote:
| Big corps are better at fielding lawsuits, it turns out.
| bruce343434 wrote:
| I've never seen claims like that without asterisks and
| small print saying "up to a reasonable amount" where
| "reasonable" is completely undefined.
| [deleted]
| outside1234 wrote:
| This sounds like the "gym memberships" of consulting - where you
| pay for the ability to use a thing on the expectation that people
| don't use it often.
| davidw wrote:
| IDK, in the US, trying to manage your health care as an 'agency
| of one' is probably going to keep a lot of people away.
| kube-system wrote:
| I bought an EPO directly from the local integrated health
| system for a couple of years and it was a great experience. It
| was inexpensive and I never had an issue with my in-network
| claims. Although, I had care on the other side of the country
| once with it, and they looked at my insurance card like I was a
| space alien. It took them over a year to figure out what to do
| about that claim, but eventually they worked it out between
| themselves.
|
| I would totally do it again -- it's about 1/2 the price of my
| current BCBS PPO for similar benefits. There's a lot more
| choice in healthcare when you're not part of a group plan that
| chooses your options for you.
| abeyer wrote:
| Maybe in some states, but certainly not all. ACA health plans
| are quite easy to manage for an individual in my experience. I
| spent maybe an hour or two a year of paperwork on health
| insurance when I was consulting.
|
| (Now that doesn't get rid of the nightmare you're likely to
| face if you have to _use_ the insurance for anything major...
| but that's just as true on an employer health plan, too.)
| celestialcheese wrote:
| The worst part of the exchanges is the lack of access to PPO
| plans, at least here in Washington. HMO/EPO plans are trash
| if you live outside of major cities.
| andreliem wrote:
| This has been around for a while, but perhaps not packaged and
| marketed in this way. Probably quite effective when it comes to
| clients needing basic design needs. I don't see this working too
| well for actual building of software products, where it's not
| about the number of revisions that matter but more about spending
| time on the client + service provider relationship and building
| the right thing.
| hammock wrote:
| This is a weird take because in the agency world (agencies of
| many, if you will), the long-term trend has been in the complete
| opposite direction: a retainer model is increasingly being
| replaced by project-based and time-and-materials work.
| jdrc wrote:
| storm? more like spring. People working on their own terms
| leroman wrote:
| The "subscription" model seems unlikely, as today companies do
| their work mostly "Just In Time" or in the industry lingo - Agile
| style. To a contractor this means the requirements when he goes
| into a project are not clean, so he can't reasonably price the
| project.
|
| The hourly rate is in place so that in this relationship, work
| means more time for the consultant and more resources for the
| company wanting said work, this is the way it should be and keeps
| everyone on the same side.
|
| If you mean, like others mentioned here, a model where a company
| pre-pays for some amount of hours this contractor promises to
| allocate for this company (at minimum) - this is called the
| "retainer model", this is fine and is a good idea for small tasks
| and not a big ongoing project
| tptacek wrote:
| Time and materials billing does the opposite of keeping
| everyone on the same side --- most especially hourly, which is
| just about the worst way you can structure a contracting
| relationship.
|
| My on this topic, ad nauseam, for over a decade on this forum:
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
|
| Particularly this fella right here:
|
| https://news.ycombinator.com/item?id=4103417
| leroman wrote:
| Coming from more than 5 years consulting, my conclusion is
| that hourly rate (a high rate) helped our motivations
| aligned.
|
| Context is important here, the work I was doing is helping
| companies with big complex software projects.
|
| Did you try something else? do you have different experience?
| tptacek wrote:
| Our projects ranged from 2-person 2-week web app
| assessments to multi-quarter assessments of entire
| operating systems, from individual projects to long-term
| staff augmentation, and everything in between. I'm
| confident that hourly rates do not in fact align your
| motivations with your clients.
| datavirtue wrote:
| I agree. The vast majority of contractors are burning
| through days like an FTE (I know of a guy who used to
| sleep, a lot...I just left him alone) for double FTE pay.
| My understanding is that this works because investors
| (walstreet and VC) cringe at employee headcount.
| Contractors do not fall under that count. There are other
| aspects such that GE can say they only laid off 50
| employees in a press release...forgetting to mention the
| 4000 contractors they just sent packing.
| tptacek wrote:
| I'm a broken record on this as well: a huge part of the
| value of a contractor is that you can retain them for the
| duration of your project, sever them, and bring them back
| whenever you need them. You don't get anything resembling
| that kind of flexibility from an FTE, and that
| flexibility has value, enormous value; high-end
| consultants charge dearly for it, and you should too.
| It's part of the expected value of the transaction.
| UncleOxidant wrote:
| I read the article and can't tell if he thinks this is a problem
| or what? Usually when you have "storm coming" as he does in the
| title the implication is that it's bad. But reading the text
| and... I'm not really sure what the problem is and I'm not even
| sure that it's a new phenomenon. The article doesn't seem all
| that useful.
| claudiulodro wrote:
| As a developer, I think the closest parallel or most common way
| people do this is to be "the web guy" for a few businesses: part-
| time, ongoing small development and maintenance. I've worked with
| many people like that through the course of my work. It seems
| like a chill life, but I don't know that I've seen anyone scale
| it to more than what the average freelancer gets.
| mpfundstein wrote:
| nowadays its "the data guy"
|
| which is me
| noelwelsh wrote:
| Productized consulting works when you can turn your offering into
| something that is standardized and hence repeatable. This works
| for some consulting markets, but not all. If you're going to make
| websites for restaurants, you can do this. If you're going to
| make high performance back ends, probably not.
| MisterBastahrd wrote:
| Storm?
|
| I know several people who charge for an initial development fee
| and then offer recurring monthly packages which handle new
| development, updates, and maintenance on a retainer. They've been
| doing this for years. The best part about this scenario is that
| since the payment is already baked in, there's really no
| incentive for the "agency" to clamor for more unnecessary work.
| They are free to be advocates for what's best for the client
| since they will usually end up making more money by using the
| extra time to bring on yet another client than they would by
| servicing this existing client with more custom work.
| thenerdhead wrote:
| This is already a pretty popular concept on Fiverr, YouTube, and
| other content-based platforms. Basically the TL;DR is the agency
| is a "face" which is a personality, etc, and the operations are
| run by a whole team and outsourced for pennies on the dollar.
| It's smart.
| codingdave wrote:
| Freelancers have been kept on retainer for quite a long time. It
| sounds like the author just wasn't familiar with that business
| model. Which is fine - I don't want to be harsh on someone just
| because they had a knowledge gap - we all do. But there is more
| to being on retainer than just a monthly fee.
|
| There still is often hourly estimation because the retainer
| frequently will be for a set number of hours, with additional
| hourly rates if you go over that limit. (Freelancers who offer
| unlimited hours get in trouble fast.) Companies therefore still
| triage their needs, to try to get as much done in the set hours
| without incurring too many additional hours.
| solitus wrote:
| Yeah I'm not sure I would want to offer unlimited hours to
| multiple clients.
| ljm wrote:
| I would consider it but it would have to be very repeatable
| and well defined and at that point, why haven't I automated
| it? The posited Agency of One sounds pretty much like a
| beginning-stage SaaS while you're doing things on pen and
| paper or a spreadsheet until you've figured out what you need
| to actually build.
|
| Otherwise, that seems like a fast track ticket to burning
| out. Retainer model and selling bundles of hours is going to
| keep your client incentivised to not waste your time.
| tptacek wrote:
| Retainer arrangements and subscriptions look similar but are
| not the same thing. A retainer is a bucket of hours sold gym-
| style, use-it-or-lose-it. Within those hours, the customer has
| a lot of flexibility with tasking their contractor (what the
| scope of work is, and what the scheduling and staffing are).
|
| Subscriptions are distinctive because they include terms based
| on defined outcomes. You're getting X done every month (X may
| also be use-it-or-lose-it, but it isn't ever Y or Z), and the
| vendor (mostly) decides how best to accomplish X.
|
| Retainer agreements tend to have bespoke terms; if 5 clients
| retain you, chances are you have at least 3 different sets of
| terms and 3 different scopes of work. Part of the definition of
| a subscription, again, is that it's the same work for everyone
| you sell it to.
|
| Neither retainer freelancers nor subscription services should
| be charging hourly; hourly is a consulting anti-pattern.
| pbowyer wrote:
| > Neither retainer freelancers nor subscription services
| should be charging hourly; hourly is a consulting anti-
| pattern.
|
| It's easy to say that but hard to avoid hourly. I say that as
| somebody who's read your threads and those of patio11 for a
| decade. I've run my 1-person business [1] for over 15 years
| and whilst I would like to break away to value pricing I'll
| still take money-for-time over fixed priced bids any time.
|
| Why? Risk transfer. With fixed bid the risk and management of
| scope creep is on me. With hourly, on the client. And not
| having to micro-detail everything in the spec before it gets
| signed off to make sure no time sinks pop up is nice.
|
| I don't know if the breakthrough I've never managed to escape
| time based billing is mindset, target audience, offering or
| location (UK), but I haven't made it happen.
|
| 1. https://www.mapledesign.co.uk
| tptacek wrote:
| People have been saying this here for 10 years, and,
| respectfully, no, it's not hard to escape this trap. Every
| project we bid at Matasano had the same terms: a whole-
| project cost estimate (broken out in units of days or
| weeks, allocated to milestones), and a clause in the
| proposal and the SOW that said overages were billed pro-
| rata additional days. Customers want to see a good-faith
| estimate of the project cost --- every customer for every
| service wants that --- but in my experience with _hundreds_
| of clients, not one has ever pushed back on T &M contract
| structure.
|
| Tell your clients what the project is going to cost, and
| then work hard not to blow past that estimate. If you go
| over and it's your fault, eat the overage. If you go over
| because the customer wasn't ready for 3 days at the
| calendar start of the project, bill them the overage.
|
| Unless your clients are whackjobs, nobody is ever going to
| take recourse to the contract terms and the law department.
| Just engaging the lawyers at all will create costs that
| swamp the overage dollars. Your customers true recourse is
| simply never doing business with you again.
|
| If you want to do straight, metered T&M, that's fine. I
| think it's suboptimal but cromulent. But even then, there's
| still no reason to ever give your clients an hourly unit of
| work. Just bill days.
| pbowyer wrote:
| Interesting, for larger contracts the way you bid at
| Matasano is how mine come out. Scoping engagement, then
| costs broken down as a guide.
|
| My reading though is what you were doing was still time
| and materials. Sure you're billing in units of days or
| weeks, but as I understand it the underlying principle is
| the same as hourly billing: track time and charge for it.
| It's not linked to the value of outcomes, it's not eating
| up unknowns that come out and each has to be negotiated
| with the client ("We didn't expect $EvilCorp we're
| integrating with would take 2 weeks to answer every
| query").
|
| In another comment you say "Time and materials billing
| does the opposite of keeping everyone on the same side".
| Can you expand on how you kept people on the same side at
| Matasano?
|
| > and a clause in the proposal and the SOW that said
| overages were billed pro-rata additional days.
|
| Did you have an approach that stopped each one becoming a
| lengthening negotiation with the client over what were
| true overages and which you should eat? I have had plenty
| of brusing conversations doing this and in my experience
| the client's expectation of what's "My fault" can be
| unreasonably wide, which is one reason for looking to
| other ways to price.
| tptacek wrote:
| It absolutely was T&M, but that's not how it's _sold_. If
| you read the proposal the way ordinary humans read a
| proposal, skimming to the price tag, what you 'd see is a
| price breakdown for the whole project, complete with a
| "total cost" as the bottom row. This isn't some magical
| thing Matasano came up with; my Matasano partners were
| from @stake, and the @stake people were previously
| Cambridge Technology Partners people, and those people
| were taught how to structure proposals by their forebears
| before them. Presumably Paul Revere was involved at some
| point.
|
| We never had any negotiations about overages. If we were
| going to bill an overage, we'd tell the client, and if
| they told us "no", the project would presumably have
| stopped there. It didn't come up.
| pbowyer wrote:
| Aha thank you! Much for me to think about.
| datavirtue wrote:
| Yeah, its stated as hourly but the real deal is 8-8-8-8-8
| across the board...and the manager stamping your
| timesheet loves this. For some reason lawyers are stuck
| with tracking every 15 minutes.
| tptacek wrote:
| I think if you have a timesheet, something has gone
| wrong.
| datavirtue wrote:
| I often have two. But don't feel sorry for me. My salary
| and benefits tromp the FTEs.
| bathtub365 wrote:
| Why is that?
| tptacek wrote:
| Because when you're billing for a day, you either worked
| on a day or you didn't. Not working on a day you're
| ostensibly billing for is anomalous enough that you're
| going to bring it up yourself with your client. For daily
| billing projects, timesheets are _mostly_ just not a
| thing. We had a couple customers that used them, but they
| were staff-aug projects.
| mariogintili wrote:
| this isn't new - how did this made it to the homepage? Maybe this
| guy coordinated a bunch of buddies to upvote
| 4ndrewl wrote:
| People have been doing this for years. Main problem is that one
| person can't scale and is _always_ on call (goodbye holidays,
| weekends etc).
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