Escape the Tragedy of Hourly Billing for Software Projects

The vendor end-up selling a commodity, where price is the only factor that matters to buyers.

It creates an environment where everybody is watching the clock rather than focus on the work itself and the quality of the work.

It places the transaction risk on the clients.

So the clients will expect to pay less, because they are taking on risk and need to be compensated for it.

It means that it’s almost impossible to know the price of the project upfront.

A fundamental law of economics and buying psychology says that customers compare value to price to decide what they buy.

With hourly billing, they only know the price (= total budget spent) at the end.