> It really is. You have to actually be good at what you’re doing too, of course, or the whole scheme falls apart. What the client’s money really buys, though, is that delightful feeling of making the thing somebody else’s problem. You know, we’ve turned it all over to a top-tier expert, and now we just don’t have to think about it anymore. The more that person charges, the more reassured the client feels.
Great advice.
Edit: to be clear, it’s a fine word choice. It just jumped out at me.
Poor word choice aside, the advice really is solid. I’ve been a consultant for nearly 20 years, the last 10 as an independent, and it took many years of screwing this up before coming to mostly the same conclusions.
In American English, a scheme is an unscrupulous, nefarious plan villains make. Often accompanied with riotous laughter.
In British English, it's more general. Like a plan, but with superficial consensus and often spreadsheets. Trees die, but people don't. You see this neutral usage in government discussion regularly.
It also reminds me: Europeans speaking English often use 'simple' before they start demonstrating things. Often painfully non-obvious things. Really boxes my ears. If it was simple I wouldn't be asking for an explanation and now you're insulting me.
In British English a "scheme" has no negative connotations. It's commonly used in all kinds of legitimate places - for example the company you work at will have a "pension scheme".
In U.S. English it has a connotation that it is nefarious in some way.
I learned a lot! I’m really grateful that people-who-weren’t-you read my question impartially and contributed their experiences.
Do you keep a gardener on staff? Or hire one every couple of weeks? Or do you do it yourself? It all depends on the size and frequency of the job, your skill set, how much your time is worth, how old you are etc.
The same applies to nearly every economic transaction on the planet. It’s always more expensive to have someone else do it. IT contracting shouldn’t be any different. Sometimes there’s a job that it makes no sense to try and do yourself, or have permanent staff do.
sometimes fixed pricing makes sense
i’ve paid fixed pricing and i’ve taken fixed pricing it depends on the situation
my favorite way to charge is on a per month basis
if they start to abuse you, push back, if you can’t or they are good at manipulation leave
also different people have different preferences for some the tracking of hours is painful, for others it’s comforting and fair
meet the client or the consultant where they are at
Charging per month of work is not that.
Its less a fixed price deliverable, and more pre-buy some hours for a discounted rate.
If the project is delivered and there are hours left, I came out ahead, if the hours run out, but I'm only a few hours from delivered, I will throw those in for free just to finish out the project.
My experience is that fixed price only works for very short (days and weeks, not months) projects that can be scoped very strictly. Even then, there’s a lot of risk of miscommunication and uncomfortable discussions. My rule of thumb is that if I’m doing a fixed price contract, it can’t be longer than two weeks. This usually amounts to very targeted fixes, upgrades, research projects. Things that are typically not so hard to time box.
i’ll roughly give you ~20 hours a week for the next 3 months but if you don’t use it you lose it
granted if their utilization drops off too much the contract gets re priced or paused
the most money i’ve made is when i can be comfortable having an uncomfortable conversation up front with occasional nope thrown
and all that matters is that you deliver *visible* value
I heard this is true in government, and it was presented as an example of why government has the wrong incentives, and private companies are much better: in a private company you get a bonus for being efficient and saving the company money, whereas in a government you get punished and they shrink your department. So I was surprised to see it presented here as a thing that happens in big companies too (but I've only worked with very small companies).
Also, the gov’t has a large scale, legally enforced monopoly.
It's not perfect. There's plenty of wasteful spending, but I wouldn't be surprised if research showed government and large businesses are similarly wasteful.
You generally don’t see corporations doing - or having to do - those things because their incentive structures are different. For gov’t, Society (as an outside party) has to explicitly apply pressure to stop it from getting out of control.
For a big corp, when they waste money, that is money that the organization itself has incentives to not waste - their problem is more at that scale, it’s hard to ‘know’ what is a waste and what isn’t, and to untangle owner/agent issues. Especially when the owner is ‘the public’ via public markets.
But there is still pressure, in the form of stock price, etc. so a company which hasn’t managed to get and hold onto a monopoly is going to be applying pressure to itself regardless. Hence, for example, the large scale layoffs going on in the US. Even if the company can’t tell what is critical and what isn’t, they still need to satisfy shareholders and cut.
It happens at small companies and medium sized companies too. I've seen it as both a contractor and an employee.
Like much common wisdom, the idea that companies are efficient (and specifically more efficient than government) is a myth.
Inefficient large companies can also linger on for a long, long time.
I also think this is why government is the most dangerous power structure (they almost never prune anything and they have theoretical claim to 100% of the country's GDP through taxation. It would be better for us all if they were heavily restricted or just figured out how to prune effectively instead of just raising taxes all the time to support inefficient program spending)
Like, there's a king on the top, he has his board of nobility, VP dukes, knight middle managers and the peasants who do all the work and own nothing. Whatever the king and nobility say is law, they're accountable to nobody (except for the pope/national government).
They are democratic, but usually of the weighted variety. Typically, he who owns more shares has greater say – although occasionally you will see other weighting methods. Government is more likely to consider each individual an equal shareholder, although not always.
Corporations likely also benefit here from the owners generally having more care for the organization and a greater desire to see it succeed. If there is something that needs to change they will work to ensure that it gets changed as soon as a problem is identified. Most government shareholders would rather sit back and just hope that things work out.
Plus there is upwards mobility, whereas in typical feudalism there is none, but it is still funny to think about the suspiciously odd similarities.
It is certainly not suspicious. It's all just people being people. It's questionable if it is even similar and not the exact same thing. Government isn't something magical. It's just a particular kind of business.
Yet for some reason you haven't... You must, deep down, be worried that I will end up taking advantage of you?
> Once you get through the matryoshka doll of managerial layers you eventually hit a politician or committee of politicians who also serve their own interests
Of course, the cool thing about government is that you can literally tar and feather anyone who violates the wishes of the owners. That's usually a lot harder to pull off in a private business.
But you need people who care. That is a rare quality when it comes to the owners of government. It's a miracle when someone shows up just to hire the worker, let alone stay in contact with the worker after they have the job.
I 100% grant that large organizations by their nature are less efficient than small organizations due to lossy communication. And some companies have a minimum size due to the nature of their work, which places inherent limits on their efficiency. But they're still subject to competitive pricing from other, similarly large companies.
HP started the Grand Experiment two decades ago to determine how long it takes to destroy a large company if every decision is either incompetent or malicious, with little assistance from network effects… and the experiment is still running.
Consider Google: they’re highly inefficient in many areas producing entire applications which are written off not long after release and failing to capitalize on areas they had substantial edges in (e.g. AI), (arguably their last successful product launch was in the 2000s) with the net result that they employed a ton of people doing things which were not really tied to satisfied customers. This didn’t matter because they had a few business areas where they had massive profits despite not having a government-enforced monopoly which more than made up for those losses. Most of the tech giants have variations on that theme where they have many people who can report absolutely absurd internal inefficiencies but until that’s broken out on a balance sheet it’ll probably never change.
Government is unique in two ways: the first is that it’s more public (which is good, but e.g. you’d be shocked if Comcast was audited at the same level) but the other is that much of that inefficiency is mandated by the same people who complain about it in public. For example, benefits programs are often structured to require expensive validation processes which cost more than the savings, and there’s intense pressure to contract everything out even though that process requires significant overhead.
this is far too often the case -- i.e., they are the only business providing X in Y region; or while technically not a monopoly their market share is so large it takes a very long time to be displaced (i.e., Google)
So Many times it's due to having never dealt with the problem themselves, but not always.
The claim as I've understood it is more that a private company puts control over efficiency more directly into the hands of the people whose money is being wasted.
A government entity is typically nominally accountable to the taxpayer, but that accountability is through so many layers of indirection that it doesn't actually do anything. A privately owned company with a small number of owners will in theory be more responsive to monetary pressures. I think where this breaks down is with ridiculously large publicly traded companies where stock price has more to do with shareholders betting on the irrational behavior of other shareholders than it does with the actual performance of the company.
When the owners of the company make money when the company makes money, it will typically straighten out its inefficiencies. When the owners of the company make money by buying and selling abstract financial instruments, not so much.
There are natural monopolies that exist, road building, water, sewer, power. All these things shouldn't be controlled by private entities.
Companies are profit driven entities and at the end of the day can look at net profit and see if it's positive or negative. This doesn't guarantee efficiency, but it gives you a pretty simple success metric that you can then work to tie everything else back to. This is a major oversimplification, but government doesn't even have that basic starting framework. Government functions cost money, but generally produce no direct monetary profit that can be measured against their cost. Of course government produces other outcomes, but since those outcomes are not monetary, you run into a units problem if you compare inputs and outputs. You can say how many crimes the FBI solves per million dollars of budget, but there's no easy way to measure a "break even" point where you have a net benefit. You can measure relative efficiency (solving more crimes for a given budget), but you can't say what the right target value is.
Even if you could measure government efficiency the same way, the other issue is that companies can improve their efficiency by just stopping inefficient activities to focus on the efficient ones, while government agencies generally do not have that choice. The FBI could probably increase their efficiency by ignoring hard to solve crimes and focusing exclusively on the easy to solve ones, but that's probably not the right thing to incentivize.
There is a book - Recoding America - that gives a behind-the-scenes look into government IT and the more recent changes that improve efficiencies and outcomes. It was published in the last 2 or 3 years and your local library almost certainly has a copy.
FYI - the first chapter or two seem to imply developers are to blame for things that are truly the fault of leadership; power through that section and the rest of the book shows developers in a different light: perhaps she was setting up a strawman to make the change look even better.
Government on the other hand, has no such feedback loops and misaligned incentives which produce enormous fraud, waste, and abuse. There is no example of government being more efficient at any activity. Pick one, and there is a counter example in private industry doing it better for less.
It certainly makes sense, but the behaviour that logic incentivizes leaves much to be desired.
If I go to the store today and buy groceries, it’ll cost X. If I go tomorrow as well, it’ll cost Y. The two numbers are barely related to each other. And only because I don’t need the things I bought yesterday.
And yes, that’s day to day. What about year to year?
Last year, I did not need any repairs to my house. This year I do. A few years ago, I needed a new roof. Three different year, three radically different home repair budgets.
The entire exercise is a refusal to due diligence of any sort. If you say $X/yr, then you don’t have to ask why. You don’t have to scrutinize reasons. Then everything becomes about adjusting this number without ever asking what it is being used for.
There is a moral imperative to not waste a single cent of taxpayer monies, which means you as the guy writing the budget must ask what every single cent is being spent towards and must claw back (and subsequently refuse to budget) any pennies that are either unaccounted for or are unwarranted.
(Yes, tax dollars are wasted and deliberately so in reality. That is another subject of debate.)
Hence why the incentives are the way they are.
But to take the example of your roof - in a business scenario, you would amortize that expense over the number of years you expect the roof to last. 15 years means you'd take 1/15 (and probably multiply by the inflation rate to account for rising costs) and put that into your annual budget request.
At the scale most governments work, reality is impossible to actually care about. It’s too much detail, and too confusing.
Instead, they allocate money, and then punish people when ‘the wrong things happen’.
Dealing with the reality is someone else’s problem, further down the hierarchy.
Also known as ‘shit rolls down hill’.
Consider instead that you're part of a co-op and your responsibility is to buy the groceries always. Someone else does the home repairs. Someone else keeps all the cars fueled. Someone else pays the utility bill. There are fifty different people with responsibilities. Sometimes there will also be "You must spend $100 on supplies for an event on July 17th."
On January 1, you get all the money that you will get for the year to buy groceries. How much do you ask the co-op board for?
Government doesn't see it as one big account, but rather "this is how much we get, this is how much we allocate to the different accounts."
Home budgets work differently. There's one pool of money and if you have an expense you can skimp on another part of the budget. Had to get a plumber? Hold back on going to the movies for a few weeks. You can't do "we had a natural disaster so we're short on money and not going to pay the prison guards for a few weeks."
Actually year of year it makes more sense because anomalies are averaged out over time.
I also think you’re being unduly unfair about the system. Yes it’s a garbage system but a lot of what you described is wisdoms that’s learned in hindsight. However when you consider that most of budgets are relatively static (eg salaries, cost of goods at a smaller scale, etc) it’s easy to fall into the trap of thinking that the costs of running a apartment could be relatively static year on year. In fact the idea of dynamic pricing is a relatively new concept.
This doesn’t mean that the idea of budgets being relative to spend is a good one. Just that it’s easy to see how it was once perceived as a viable methodology.
Yes, I agree that incentives can get strange, but that's the mindset to understand from executives.
Ah ah ah, good joke. A manager in a company get promoted because more peoples work under them, not because they managed to keep the numbers low.
In a company, the bonus you get for being efficient is "thank you" (if you're lucky) and the CEO buying a new lamborghini.
For professional work there is often a rate table.
If you want to convert someone into a cut-all-government right winger or libertarian, send them to work in government for a few years.
If you want to convert someone into a communist, send them to Wall Street for a few years.
Any sane person exposed to any human institution will typically walk away thinking "burn it all to the f'ing ground."
All human institutions tend to be loaded with self dealing, perverse incentives, and incompetence. We are not good at this.
The only thing that checks it is companies going out of business or the government analog, which is struggle between agencies for funding and accolades. But as others have said large companies can muddle on for a long time and large anything can amass a lot of political and cultural cache and become too big to fail.
https://www.smalltofeds.com/2014/09/fixed-price-versus-cost-...
No matter how bad you are, you end up making profit. Combines worst of socialism and capitalism.
Government contracting is murderously complex, and factorially moreso when it involves the military.
Being off a few percentage points of the initial cost estimate can mean the difference between a profit or an 8 figure loss or more. If the profit insurance wasn’t in place, fewer contractors would take the risk.
haha, good joke
every time I've saved company money and made them more efficient my reward was: more work for the same salary.
You're more likely to get not much more than a pat on the back, and then be expected to work with the lower budget for eternity, even if your savings were a one-time overhead hack.
Many companies are internally every bit as centralized and dysfunctional as the Soviet Union.
In most large companies, they often talk about entrepreneurial spirit, efficiency, ruthlessness innovation, and all of the other behaviors that made the company great, but the reality is that the incentives are much different once the founders have left and career managers have moved in.
What’s left is a lot of people who make enough to not be hungry but are not rich enough that they will be okay if things blow up.
If you want to grow in middle management your best bet is lots of headcount, a large operating budget, and lots of promises that will take years to be validated.
Private companies get bonuses for wasting money and besides the money wasters don't care because it is not their money.
The unspeakable money burning that goes on in my workplace is insane. Infact, I have seen first hand that, people who wasted most money(despite no useful outcome) get promoted quickly by several ranks, which means anyone wishing for a promotion now finds elaborate ways to waste more money.
Editing to add: I did enjoy it regardless. Informative and well written.
I think this is a potential moral hazard with agile / scrum / mob programming, etc. It can have a tendency to minimize risk for the consultancy while maximizing billable hours.
Personally, I divide my availability into contracts and the more concurrent contracts I have, the more I pad for overhead. So one 40 hr/wk contract vs three 10 hr/wk contracts.
It's possible to stack more, as often retainers aren't fully used, but I think it risks the relationship with clients, which is worth more than over scheduling yourself.
When you are paid hourly, you work at the customer’s whim, and are often treated like an employee, or worse. You are essentially just a body for rent.
When you have a fixed price, you retain full autonomy. It’s up to you to decide the schedule, as long as you deliver on-time and within budget. The customer can’t change scope without your agreement. You feel like an actual human being.
Fixed price sounds like a great idea, but if you can't trust management, even middle management, it will rapidly turn into a disaster.
When the scope is clear and I have a feeling that the client won't be the demanding type with frequent, unplanned changes I often prefer fixed price.
If the scope isn't clear though, or if I get a feeling there will be a lot of incoming change requests, I'll go hourly.
Why not a new fixed price for each change?
With hourly it has always been an easier conversation for me. The estimate is pegged to time, and if change requests come up its easier to see what happened. With they said, I'm pretty generous on actual hours worked if the client doesn't ask for anything different and I simply under estimated the work needed for a job. I'll bill fewer hours when its obvious they my estimate was just wrong.
Having said that sometimes it can work in your favour. I did one project for a pharmaceutical company where I just happened to have several pieces of knowledge that they needed and they were losing a lot of money waiting for a solution. The first thing they said to me when I walked in the door was "we are so glad you are here, we have been looking for a solution for ages and are losing a lot of money every day". Eight days work kept me going for the whole year.
The 12 hour days to meet some crazy deadline also disappears pretty quickly when you are paying for all the hours. I won't even accept fixed-price contracts anymore.
If someone loses their autonomy as a contractor that's all on them, not the contract. I was always very clear that it was a B2B relationship with my clients.
Hourly rates also meant that if projects went long, or other work became avail, I would usually just continue to work on it, which can become quite lucrative. Fixed-bid contracts always gave the client a reason not to sign another contract. Time and Materials contracts meant a 3 month contract could easily turn into a 9 month contract, no new contract necessary.
As another poster mentioned, you very much have to be selective. A lot of time our first contract will be a fixed price with a client to show our ability to deliver, so in that instance we lose a little to gain a client. It's a balance and it's not an easy life for anyone.
Consultants can be beaten and battered on behalf of an internal team and those that are good realize that in many instances that's what you're hired for.
The bigger problem I don’t hear discussed in any of these threads, is that you can only estimate jobs you’ve done before. So, to do fixed bid profitably, it really requires that you are specializing in some set of deliverables. This, actually has some interesting benefits as well, one, is that you can charge a lot more over time, and you can become very efficient as well, which leads to a high profit per effort ratio.
But wouldn't it better for both consultant and customer to agree regular "gates". Agree on $100k of work for 10 units of work or whatever, but agree that it's paid in instalments of $10k every time each milestone is passed, ensuring that any misunderstandings are understood sooner.
The customer would benefit in that they don't have to wait 3 months to get a waterfall delivery which perhaps meets the spec, but not their requirement
The consultant benefits in that they don't do 3 months of work and don't get a penny until the customer is happy
The contract should also describe what happens when those milestones are not met, e.g. for every day that milestone X is not met, then milestone Y will be pushed back accordingly, or the cost for Z will go up by some amount.
A well written contract should make it almost irrelevant whether you're getting paid hourly or for a fixed cost, because you (and the client) are covered either way.
With an hourly contract, we're on the same team and try to use me for the most valuable stuff as long as you have me.
The part that consultants don’t talk about is that you have to pay them to learn your code / company too. Nobody can just jump in and add value immediately. So you’re paying for onboarding hours, you’re paying for other employees to educate the consultant, and so on.
Likewise as an engineer, I think the most interesting projects and companies err towards primarily full time people. So if my goal is to work on the most interesting projects, I’d want to work full time.
A lot of consultants, for example someone helping with SOC2 compliance, is mostly copy pasting a large document with recommendations and moving some paragraphs around based on interviews with the team.
Not different from your average lawyer helping with an estate plan or will. The reality is that for many things you do want the cheapest lawyer, because the project is simple and repetitive. It’s the uneducated that pay more. So yes for a murder trial I want to pay a lot for a lawyer, but for small things I don’t, and you shouldn’t either. I simply don’t buy the analogy.
Finally, while consulting might be good for cash flow to hours-worked efficiency, it’s not clear it will make a person wealthier than other forms of income. I’ve met rich employees, founders, but not so much independent consultants.
You also pay for the psychological friction and pressure that the consultant has to suffer from the fact that customer expects them to be geniuses with magical powers and the project managers planning the time line according to that.
I know one guy (a consultant now) who I would trust to Navy SEALs parachute into almost any technical problem and come up with a real solution. Any part of the stack, from building a physical hardware test bench, debugging firmware compiler bugs, desktop software development, to a scalable web stack. These people exist, and they're not cheap.
However, it's worth noting that no one with skills like that works at Deloitte.
It makes me think of "The Wolf" from Pulp Fiction.
"It's about thirty minutes away. I'll be there in ten."
The US seems pretty distinct in that you can be a laborer and have quite high incomes. It's not unheard of to see people in major cities within the US having 7-figure incomes and still being an individual contributor in their field. Most of the "consultants" I've heard of outside of the US are only "rich" in that their incomes are high for their region (charging HCOL US rates while living in a place that is LCOL) or they're not doing labor anymore because they own a consultancy firm. In the US, I think consulting isn't worth it unless you are extremely lucky. You're more likely to see high income by trying to join FAANG.
I've been one of these people with the 7-fig incomes in the US. Unsurprisingly, you'll see a lot of data points like mine here because HN is primarily focused on the US audience since YC is a US (primarily silicon valley) company.
Usually the internal staff knew the business well but were weak on the technology they were using. No amount of training seemed to fix that.
The only downside for me was the travel which was why I used the downtime between jobs to pivot to developing my own product.
This is the best advantage. Being an "outsider" in the sense of having a special role (age, status, etc) can be a huge aid in avoiding bullshit.
That depends on the project and how much domain knowledge the consultant/contractor has. I've certainly been able to contribute on day 1 on several of my gigs.
> I’ve met rich employees, founders, but not so much independent consultants.
May depend on the market, and what you mean by 'rich'. Consultants rarely get stock, but they often make out far better than employees. I've met very few employees that got anywhere near 'rich' but consultants in London (for example) can certainly become quite wealthy.
Consultants/Contractors do not.
This is why consultants/contractors have to charge higher hourly rates.
Better benefits than my previous FTE job.
Why should they? That's a given. Of course they don't know your code. But it's likely they've seen more code than a typical employee and therefore have more experience to contribute. A consultant is a serior employee sans the commitment.
To your point about time, consultants don't need 1 v 1s, quarterly / annual reviews, etc.
I understand why your cynical. I've seen some half-ass'ed consultants as well. But I've seen just as many stale, complacent, and complicit employees.
> The part that consultants don’t talk about is that you have to pay them to learn your code / company too. Nobody can just jump in and add value immediately. So you’re paying for onboarding hours, you’re paying for other employees to educate the consultant, and so on.
as somebody who's been on the team, i agree on this. in my previous job my skip-level management insisted on handing off some crucial infrastructure work to external consultants.
results:
1. we on the (internal) devops/sre team did not know how parts of our infrastructure worked
2. when changes were needed, the first lenghty step was to figure out what was built by the consultant, and how (the manager did not like to pay the extra hours, of course)
3. when help was needed to troubleshoot something along with developers, we (devops/sre) ended up playing the role of messenger, and stuff that could have take anything from 2 hours to two days ended up taking up to two weeks
It was a frustrating job, so of course some people (me included) ended up leaving the company.
I still see the value of consultants as people that can bring the knowledge you need when you need it. However if they're going to work on something long lived, the manager must be enforcing some proper knowledge transfer during the consultant employment and at the end of it.
That said, here are some of my own, condensed across experiences:
- An executive wanted to use ML, couldn't get enough political capital to build a full-time team (and didn't have the knowledge to interview candidates anyway). A very small consulting firm, sourced from high personal trust networks, got an MVP going. That led to a FT team getting built. Code was a mess but started the flywheel and after several years everyone agrees it was a great ROI
- A large company had a tiny team using a technology that would be standard for FAANG but they had no support or training. Zero progress for about a year. Not important enough to throw huge money at but that link in the chain was becoming a bottleneck for the core product. A consultant came in explicitly as a multi-week trainer, and but the team just never got up to speed. Consultant's code examples grew until they were just direct bugfixes, and though nobody was happy, at least the crisis was resolved.
- A product finally reaches product market fit. Executives decide to hire only after the team is drowning in tech debt. But it has to be full time, and it has to be junior. It takes months, then requires training. Tech debt is twice as bad as the original crisis level when the new hire becomes value positive. For some bizarre reason he leaves after exactly 2 years.
Many consultants have a branding problem: Their biggest victories are fixing a disaster that their clients would rather not talk about publicly. Hard to put on a billboard, if you ever want work from that client again!
Hmmm, I do this all the time. I've taken a bunch of bad data analytics, ML code from my clients and quickly given them insights that more than paid for my work.
A true expert can often come in and "fix" things quickly.
Feels like there's a parallel in consulting. The best ones will coach you to replace them with full-time hires. That being said, there are a lot of occasions where reality means that contractor may be the better option and a win.
(I've been on all sides of this)
>
> On the other hand, it’s in the consultant’s interest to do the quickest and cheapest work necessary to get the client to sign off on the job. After that, they have zero incentive to fix any problems that arise. It’s just bad news all round.
I don't agree with this at all. If you give a fixed price contract that includes bug fixes for a period, then your incentives are well aligned.
- You want to release robust code (to avoid warranty bug fixes), and your client wants that too.
- You want to finish quickly to get final payment sooner, and your client wants it finished quickly too.
- You set the price to what it needs to be and you'd be happy with, and if it's too rich for the client, you just don't take the job (does require you to be in a situation where you can reject underpriced projects, and requires you to be good at quoting).
- Client shouldn't care if you took half the hours you estimated, and they don't need to know. You both agreed to a price that works for you both, so ideally both sides have had a winning experience.
I have had experience with a client that tried to squeeze every drop of juice, and that sucked. They had no choice though because their budget was completely unmovable (came from grants). My thinking is that it's probably best to prune such clients when you can, and stick with those whose expectations align well with your way of working. Not every client tries to squeeze every last feature out of you.
Hourly is easy for the seller, but it's a sucky experience for the client. It builds distrust, and unlike fixed price, I think it's actually hourly pricing that misaligns incentives. I also don't like the social aspect. E.g., where people question how you're spending your hours, or you have a chat about the weekend don't know whether to make it clear that you're not billing for that time, etc.
Do you get paid for estimating? To properly estimate takes a good deal of time.
Hourly-billing benefits no one.
The way it was phrased to me was "they're paying for your confidence". Confidence that you can just come in and get the job done without too much trouble for them. That was pretty much the best advice I got as a consultant. His advice about doubling what you think your rate should be is also good, and when my company started doing that, we didn't lose clients, instead we moved up-market and actually ended up working with better clients on much more interesting projects. I think both nuggets of wisdom are of a piece: act like you're an expert that is paid commensurate with your success rate. Of course, you have to back it up, but isn't that an implementation detail?
Sometimes it's the job of someone, like in Procurement, to try to get a better price from a vendor, regardless of what value the company thinks they're getting. But unless they think you're a commodity that they know they can get from another vendor, they can't push back too much.
Other times (IME as an independent technical consultant), the executive/manager hiring you, who has some sense of your value, has to make a case to someone else, about why your rate is worth it. This can be due to sticker shock, or can be something they have to justify on government contracts. So they might ask for help with this case, subtly or directly. Like putting together a bio, itemizing some credentials, or answering specific regulation-based questions to make sure you qualify for some grade or exemption. IME, that's never been a negotiating tactic, and always worked out, getting the work with no discount of rate.
(Just anecdata; I don't claim to be an expert at the business of consulting. I generally delivered very high value, like few people could, and some clients got a great deal, while I also turned down a lot of work where the client thought they had commodity needs. I could've addressed this by growing a consulting firm, hiring "associates", who I supervised and mentored as a "partner". But, rather than sell difficult-to-value billable hours from a distance, I'd prefer to build tech startups as a founder, where I can be holistic on an entire product/business, and reap bigger rewards if successful.)
Don't those 2 sentences contradict each other?