As I transition from full time employment to being fully self-employed (starting in September), I’ve had the wonderful opportunity to talk with a number of potential clients from all industries, with all types of past experiences and varied budgets. In the last month alone, I’ve talked with over 20 different companies. During these talks I’ve learned one major thing that surprised me. I suppose because I’ve been working for individual companies for so long I didn’t realize there were so many misconceptions about developers, web development, and productivity out there in the business world.

I’m only going to discuss one misconception in this post, if you want to hear more about the many issues of web development and putting a team together, come to the open Tampa Bay WaVE meeting on 9/20 – cohosted by TBTF’s Emerging Companies Network where I’ll be on a panel discussing how to avoid pitfalls in website development.

The most major disturbing trend I’ve observed is the sole reliance on hourly rate to determine overall project cost. In other words, a developer who charges $45/hour is far cheaper than one that charges $75 hour. Make sense right? If you paid for 10 hours of work, it costs you $750 vs $450. But if you calculate development costs that way you are leaving out the #1 most important factor in development: time.

It takes time to code anything, but if you think rates among developers have a wide varied range, you may have no idea just how wide the range is in productivity. It can be so extreme as to be almost unbelievable. There have been numerous studies over the years demonstrating this to be as much as 10:1 or even 100:1. In my 15 years in IT, I’ve observed this range in productivity to be extremely common. I’ve had many managers who actually double and triple development estimates depending on which of their developers they plan to assign the task to. It’s really not unlike typing. If you wanted to pay someone for data entry and paid for the hour, wouldn’t someone who types 120 words a minute be cheaper in the long run to hire than someone who types 30 WPM, even at 2 or 3x the rate?

“A great lathe operator commands several times the wage of an average lathe operator, but a great writer of software code is worth 10,000 times the price of an average software writer.” –Bill Gates

Consider then, that if you decided to hire the $45/hour developer and it takes them 40 hours to complete a task. The project took longer than you’d hoped, the software isn’t quite as fast as you would like, but its completed and you are quite pleased that it only cost $1,800. But what if you had hired a more experienced developer, one who is more a ‘Software Engineer’ than a programmer, and that person had completed the same project in 10 hours? At $75/hr (which is still a steal), your total cost would have been $750, and most likely perform better, be more stable, and be better able to be expanded and supported in the future. Or even if it had taken 20 hours, the total cost is still only $1,500 for very likely a better result.

If you aren’t convinced this issue exists, ask around. Talk to CEOs and Founders of startups and ask them for their early experiences of hiring developers and just how well it went for them. I’ve heard horror story upon horror story, and a good percentage of my projects over the last year have been to fix poorly written code written by teams that were hired on the cheap.

Sometimes the code is poorly written because those hired are unethical or believe themselves to be far better than they really are. Other times, its not that the person you hired is a bad person, its just that they haven’t yet put in the time on numerous projects in a wide ranging set of challenges to have gained the experience necessary to increase one’s productivity and quality. I’m not attempting to disparage any of them. Everyone must start somewhere, and everyone has or will. I’m speaking to owners, CTO, founders, and anyone in the position of deciding what rates to pay and what developers to hire to make them aware of the other side of the cost equation.

It’s a simple plan of action to help ensure you don’t pay more in the long run. When you ask for an hourly rate, recognize that you have only asked for half of the information needed to determine cost. You cannot decide to hire one person over another based on the rate. Make sure all your inquiries include both hourly rate and hours estimated. It’s the total project cost you have to calculate. And even with that, this simple calculation leaves out future costs of maintenance, likely hood of needing to hire someone more experienced in short notice to assist the cheaper developers when they are faced with an issue they can’t resolve, etc. I’ve heard so many stores in just the last month of estimates provided by the cheaper developers that in the end resulted in 3 – 4x the hours they originally estimated…and paid for.

I love seeing products come to completion. I love seeing a Founder’s vision realized. I know from experience its very exhilarating to see an idea from your head actually result in a finished working product. Equally, its so disheartening to hear of startups and companies unable to get their product to launch because of poor hirings, particularly when so many of them seem to have been entirely based on finding a low rate.

Here are a few questions to ask before hiring a contractor/freelancer to work on your project…in addition of course to asking for both an hourly rate AND an hourly estimate:

  • How many projects of this size have you provided estimates for in the past? Can you provide contacts and recommendations from clients about those past sizings?
  • What are you basing your sizings upon? What past projects provided similar functionality to my project?
  • How many projects of this size have you completed in the past? Can you provide contacts and recommendations from those clients?
  • How and when will you communicate to me if the time you originally estimated isn’t enough? How soon will I know?
  • If the deadline is approaching and it doesn’t look like it will be reached, what is your strategy for increasing productivity and still meeting that deadline?

Nothing can ensure a perfect development process and no set of questions or advice will completely prevent hiring the wrong person or spending too much. But the more you know the better the decision you can make. So please, never let me again here the one and only question: ‘What’s your hourly rate?’ Ask for the rate, that’s fine, but follow up with some sample projects and ask how long they took. You might be quite surprised how fast some developers can complete projects.

Do you have any development horror stories and/or suggestions for dealing with these situations? Leave your thoughts in the comments below.