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We're a client that recently hired a contract programming company for some fairly focused work (essentially writing 'scripts' to extend the functionality of a third-party enterprise application). We're trying to evaluate their performance on and the value of some work they did for us, but we're a little new to using contract programmers and could use some help:

  1. If you were hiring a company as a contractor to do computer program development for you, and the minimum billing time unit was not mentioned in the contract, would you expect to be billed in whole-hour increments (so that a phone call of 5 minutes is billed as 1 hour)?

  2. What is industry standard practice for the minimum billable time unit in contract programming work?

  3. If you hired a contracting company that had two employees, would you expect each person's time to be broken out and rounded up to the minimum billable time unit? Let's say the senior guy worked with the junior guy for 15 minutes, and the junior guy worked 4:15 that day. Would you take exception to a bill for 1 hour (senior guy) plus 5 hours (junior guy), or would you expect a bill for just 5 hours?

You may find my follow-up question about key contract points interesting.

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3 Answers 3

up vote 9 down vote accepted

First, the obvious point -- whatever you're going to do, put it in writing, and make sure the client is completely aware of how he is going to be charged. A surprising bill is a lot more harmful than a big bill, every time.

Second, the real money for you is in keeping a client over a long period, and making them unafraid to call you when they need you, not in getting as much money as you can each time they do call. Make sure this is reflected in how you're billing them; look at the policy you wrote down for the first part, and see which of these two cases it would look like to you if you were the client.

Now, how would I recommend you actually bill? Here's how: don't try to find an hour here and an hour there. Total the time you spend working for the client up over the whole billing period (usually two weeks or a month, but you'll nail this down with the client in advance), and figure our how many hours this comes to. If you work 45 minutes a day for them for four days, this is three hours, not four hours. If you work ten hours and fifteen minutes a week for them for two weeks, this is twenty-one hours, not twenty-two hours, and so on. In the time I spent contracting, I found that what you lose in nickel-and-dime stuff, you'll make back in a long and productive relationship -- though Your Mileage May Vary.

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We're the client here, and we are surprised, and we don't like it. We're not completely pleased with how the contractor has handled things, the billing, the communication, and the scope of work done. We don't like having two separate people's hours on a day rounded up to the next hour, when we didn't hire two contractors, we hired a company. –  ErikE May 4 '11 at 21:49
Even though you answered from the contractor perspective, your answer was helpful because our answer to the question "does it feel like this contractor wants a long term relationship with us or are they just trying to get as much money as they can?" is the latter. Which of course means it's time to cut things short. –  ErikE May 4 '11 at 23:08
Yep, if you think you are being ripped off you probably are. –  user23157 May 5 '11 at 18:16

Programmers, even contract ones, are not like lawyers in most cases with billable hours, there is a lot of rounding going on with most bills. Also, its been said in other posts on this site, look at the quality/quantity of work completed and the total cost of the work, and ask yourself did it seem reasonable, trying to breakdown hours to the minute is not going to get the results you want as there is just to much variance in the time it takes programmer between indviduals and situations. Also, I've rarely seen bills broken down in enough detail to even tell what was going on during the hour billed.

I'm a consultant and I'd probably never charge for a 5 minute phone call, the goodwill with the client is worth more than the time spent, though if you call me out to your site, I'm probably billing you at least 8 hours for the work, as you've severely hampered doing any other work for the day (unless it was an agreed upon, scheduled meeting, then it would just be the time). If I'm working at my site, I'm probably billing nearest half an hour.

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Do you put that you bill to the nearest half hour in your contracts? Does this mean rounding up always or ever rounding down? What if you really only spent 10 minutes on something, what would you bill? –  ErikE May 4 '11 at 23:10
I don't write my contracts, I work for a global consulting firm, but I also mainly work on longer engagements (think months) and have an expected 40hr/wk bill, so my hours tend be treated more like a normal employee (ie Dentist appointments happen type of thing) and both sides agree not to nickle and dime each other (I might work 38hrs one week, but 45 the next and the bill would be for 2 40/hr weeks). I generally only bill over 40 hrs unless the client has conssistently been requesting additional work, and then generally beyond 50 hrs. So my situation might be a little different than yours. –  ben f. May 5 '11 at 20:32
Thanks for the extra detail. This kind of longer engagement isn't quite what I had in mind, where one is hiring someone full time, but rather focused hiring to do a specific (and fairly small) job. –  ErikE May 5 '11 at 20:44

You have to think about it this way. There is a context switching overhead to the senior guy stopping what he is doing, helping the junior guy and documenting the time for that project and then getting back to what you were doing before the interruption.

Might not be 45 mins but it is there, and it is just a fact of doing business, there is more to developing software than just writing code. If there wasn't people would bill by the line of code and that wouldn't work either.

Personally I only charge in minimum 4 hour increments, anything less isn't worth the overhead of having to keep track of minutia and details. And you can't really get a significant amount of development work done in less time, unless it is tech support, which gets bill differently than development. And that gets billed by the hour, I usually let short things less than 15 slide if they are one off type things, and anything more than 15 mins is rounded up to an hour.

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Bogus. First of all, we are paying very close to standard contractor rates, which implies that we are hiring an expert. Second, context switching is NOT the client's problem, because the contractor is the one who is deciding when to do the work. He's already getting the huge amount of profit between his billable rate and what he's paying the junior. He doesn't get to pad the bill for coming up to speed to help out the junior, when if he'd done it himself he would have done it faster and had no context switching. That is an internal division-of-work issue that is HIS problem. –  ErikE May 4 '11 at 21:54
Third, he has other clients and has made it clear he doesn't have full time to work on our project. So if he turns in one hour on each of three separate days, it was HIS decision to have "context switching" rather than just working for three hours on one day. I cannot accept that people padding their bill in this way is "just a fact of doing business." You might similarly argue that travel time from home to the office is part of "context switching" so we should pay for that too! Only charging in 4-hour increments is the privilege of any contractor, as long as he says so up front... –  ErikE May 4 '11 at 21:56
... and is responsible with his use of the time. It sounds like you've hit on a way to be more efficient and that is a good thing. However, I'm asking about industry standard practices based on actual experience with more than one contractor (yourself being one). –  ErikE May 4 '11 at 21:56
I would have never given you an itemized bill for two persons hours if you are paying a flat rate per hour. It is none of your business who does the work as long as it is of acceptable quality. Do you think companies that outsource work to other development houses for a cheaper rate, tell the clients what that cheaper rate is? Answer is no! If you don't think you got value for your money, fire the contractors and find someone else and get the deal you want up front next time, chalk it up to a learning experience. I doubt you are going to change they way they do business. –  Jarrod Roberson May 4 '11 at 23:39
And yes, it IS a learning experience. :) –  ErikE May 5 '11 at 1:31

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