Billing by hourly rates is like getting paid by lines of code: the worst coders will get the highest scores.

Only if the good coders are honest, and charge the same rate

I think a lot about how to do that better... Have some ideas, probably all going to fail. But as soon as I grew my little freelance business into being a limited and hiring a few people I am willing to try...

But the problem is always, give them a target and their performance will be optimized against that target.

If the target is to do 3 story points per day and you can go home on a full day's pay: Either leave after 3 tickets or 8 hours. I just incentivized everyone to gauge tickets as more complicated than they are.

Because if you judge them too tight, then everyone groans at your estimates. No one's even malicious.

So... I need a second team to judge tickets neutrally, that does not benefit from this... Now I moved the problem a team over. The first team is fine. But the second needs a similar incentive structure and I start all over again. Not to forget, that I just removed a huge amount of flexibility.

@jestdotty

A good system can defend itself. It incentivizes good behavior.

Capitalism is one of those systems. At least in its pure theoretical form. Because in that form, the baker doesn't have to be a good person to stand up at 4am to make bread. He does it for the money. And that's good for society. And limited resources will auto-balance themselves by supply and demand... Theoretically.

A system without an immune system is useless. We can lament all the time that if just everyone was just like us, then the world would be a better place. But people aren't like us and instead we need to fine-tune the system until the best action for a person to take is beneficial for society.

And we have cut out the need to judge someone's character. We simplified the question to, is that person mad or will he do what's best for himself. That's a hard enough question to answer, we don't have to use a scale, his heart and a feather.

Yes, billing by time is easy to communicate, and it gets easier the more hours or days there are.

Customers might argue about 4 vs. 5 hours, but usually they don't care much about 40 vs. 50 days anymore.

And, yes, when I' m in a project with low hourly rates, I tend to bill more hours to compensate for my underpaid but above-average service.

@jestdotty that subsistence state is where modern capitalism turns into communism or what 20th Century states made out of it: provide a minimal living standard and keep the people occupied and distracted.