In Pricing a Project Brian Fling talks in great detail about how Blue Flavor prices their projects (duh). It’s a great article, and I find their process strikingly similar to what I do in Substance Lab.
At a recent project, the client approached me with a set amount of money and said they’d pay me all of them to implement a specific feature. I responded that I would much rather bill them per hour actually spent. They agreed, setting the proposed amount as a max ceiling in the contract. In the end the feature was implemented for around half of what they proposed, making for one pleased customer.
Certainly, I could have made a lot more by accepting the initial proposed amount of money, but it would have felt like cheating. I don’t want to get paid for work I don’t do, and I guarantee you no client wants to pay for it.
I find billing by the hour meets both ends; protecting the client from paying for more than they get, and the contractor from doing work without getting paid.