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Leitura de 13 min

Time vs. Value: Billing for Features

Summary

In this episode of Developer Tea, host Jonathan Cottrell challenges the conventional wisdom of trading time for money. He begins by recounting his early job at Atlanta Bread Company, where his compensation was directly tied to hours worked—a common model for many jobs. However, he argues that in knowledge-based industries like software development, this model limits earning potential and fails to capture the true value created.

Cottrell proposes a fundamental mindset shift: instead of focusing on time spent, professionals should focus on delivering work that others cannot or will not do. This involves developing unique expertise, achieving higher quality, and working more efficiently than competitors. When you reach this point, you are paid for the value you create—your knowledge, problem-solving ability, and charisma—rather than merely for your time. This transforms you from a utility into a valued specialist.

He then applies this principle to practical business arrangements, specifically for contractors and freelancers. The key recommendation is to structure proposals and contracts around billing for features or deliverables instead of hourly rates. This reframes the conversation with clients around the value of the outcomes, making it easier to justify higher prices and align incentives. Cottrell acknowledges the challenges, such as the difficulty of estimation and the need for clear contract clauses to prevent scope creep, but emphasizes that value-based pricing is fairer and more profitable for both parties.

The episode concludes with a reminder that this approach requires demonstrable, measurable results. By shifting focus from time to value, professionals can increase their income, improve client satisfaction, and build more sustainable careers based on the unique impact they deliver.

Recommendations

Tools

  • DigitalOcean — Promoted as a sponsor, DigitalOcean is described as simple cloud hosting built for developers, allowing deployment of SSD cloud servers in 55 seconds with plans starting at $5/month.

Topic Timeline

  • 00:00:00 — Introduction and personal story of trading time for money — Jonathan Cottrell introduces the episode’s theme by sharing his experience working at Atlanta Bread Company as a teenager, where he was paid hourly. He explains the common perspective of trading time for money and sets up the need for a shift in thinking for knowledge workers.
  • 00:01:56 — The perspective shift: from time to value creation — Cottrell outlines the core mindset shift: to create maximum value, you must do work that others cannot or will not do, at a higher quality or faster pace. This moves you from being paid for your time to being paid for the unique value you provide—your knowledge, charisma, and problem-solving abilities.
  • 00:04:36 — Sponsor message: DigitalOcean — The episode takes a break for a sponsor message from DigitalOcean, promoting their SSD cloud hosting services. They offer plans starting at 10 discount code DEVELOPERTEA for listeners.
  • 00:05:49 — Applying the value mindset to proposals and billing — Cottrell returns to the main topic and introduces a practical application: shifting proposals from hourly billing to billing for features. He argues that estimating time is difficult and that framing discussions around feature value, rather than hourly rates, aligns client expectations with the delivered outcome.
  • 00:07:45 — The fairness and economics of value-based pricing — He elaborates on why billing for features is fairer for both parties. If a feature provides little value, the client shouldn’t pay much regardless of time spent. Conversely, high-value features command appropriate payment. Cottrell advises including safety clauses in contracts to prevent scope creep while maintaining the principle of value-based pricing.
  • 00:09:56 — Conclusion and call to action — Cottrell wraps up by encouraging listeners to adopt this mindset to increase their income and client satisfaction. He reiterates the sponsor message for DigitalOcean and thanks the audience for listening.

Episode Info

  • Podcast: Developer Tea
  • Author: Jonathan Cutrell
  • Category: Technology Business Careers Society & Culture
  • Published: 2015-08-21T07:00:00Z
  • Duration: 00:10:37

References

Podcast Info

Transcript

[00:00:00] Hey everyone and welcome to Developer Tea. My name is Jonathan Cottrell and today I’m

[00:00:08] going to be sharing the simple perspective shift that helped me to understand how valuable

[00:00:14] programming was.

[00:00:20] When I was 16, I worked at a company called Atlanta Bread Company. I really enjoyed it

[00:00:26] because I made money. I spent my time working hard and interacting with people and it was

[00:00:34] simple math and taking money from people, putting it in a register and giving them their

[00:00:39] change back, making sure they got their orders. And in fact, I was lucky enough to have good

[00:00:44] managers at Atlanta Bread Company. I was able to give people refunds and give them free

[00:00:51] things when things went wrong and do right by my customers.

[00:00:56] Now, I always had been taught that my time was what I traded for money. And this is a

[00:01:03] fairly common perspective. You have an hourly rate and you charge that hourly rate or you

[00:01:09] charge whatever your hourly minimum wage is in the country or region that you live in.

[00:01:15] Those are how you are making money. You’re trading your time for money. And that was

[00:01:20] certainly true when I was at Atlanta Bread Company. Most people could accomplish the

[00:01:26] job that I accomplished working as a cashier at Atlanta Bread Company. And certainly some

[00:01:32] people would do the job differently. And perhaps there would be some people who do it more

[00:01:37] efficiently or less efficiently. But overall, the time is traded for the money. I want to

[00:01:43] share a simple perspective shift with you today. This doesn’t matter whether you’re a

[00:01:48] developer or someone else. This is an episode that you could share with everyone you know

[00:01:53] and it’s relevant to everyone in Atlanta Bread Company.

[00:01:56] In a given industry that goes beyond trading your time for money, the shift in thinking

[00:02:02] is very simple. To create the most value in my job, I must do work that most others either

[00:02:11] won’t or can’t. I must do it to a quality that most others will not achieve or cannot achieve.

[00:02:19] And I must do it faster than others are able or will do it. Or a much shorter way

[00:02:26] of saying this is, I must do something that others cannot or will not do. If I can do

[00:02:33] something better than everyone else, or if I can do something that no one else is willing

[00:02:37] or able to do, then I am no longer paid for the time that I spend doing something. Rather,

[00:02:44] I am paid for the thing that I am doing. And that shift in thinking is monumental. It makes

[00:02:52] such a big difference simply because what you are doing is not something that you are

[00:02:56] is the value that you are creating. You are no longer a utility. When you arrive at this

[00:03:03] point of being able to do something that few or no others can do, then people pay you for

[00:03:10] your knowledge and for your charisma and for your ability to handle problems in ways that

[00:03:16] no one else can handle them. Another way of looking at this is that you should be paid

[00:03:21] for the value you are creating for someone rather than the actual value that you are

[00:03:26] that you are spending for someone. And certainly this is not an easy thing to accomplish. In

[00:03:33] fact, it is perhaps the hardest part about being a contractor or a freelancer is getting

[00:03:39] yourself to the place where your expertise is specific enough that no one else can compete

[00:03:46] with you. But implementing this mindset, even on a smaller scale, even if you don’t want

[00:03:52] to be the only person who is able to do something, perhaps you are not the only person who is

[00:03:56] You can consider this idea of delivering value rather than delivering time. Again,

[00:04:04] it’s a simple mental shift, but it can make a monumental difference in the way your clients

[00:04:10] perceive you. It can make a monumental difference in the way even your boss perceives you.

[00:04:15] I’m going to take a quick sponsor break and then I’m going to come back and talk about a

[00:04:19] very simple way that you can change your work proposals to allow for this change,

[00:04:26] of perspective to occur. And all it’s going to take is a very simple shift in the way

[00:04:31] that you structure your proposals. We’re going to talk about it in just a minute.

[00:04:36] Today’s episode of Developer Tea is sponsored by DigitalOcean. DigitalOcean is simple cloud

[00:04:41] hosting built for developers. They’re dedicated to offering the most intuitive and easy way

[00:04:45] to spin up a cloud server. And in just 55 seconds, you can deploy a solid state drive

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[00:04:56] a 20 gigabyte solid state drive, one CPU, and a full terabyte of transfer. In addition to offering

[00:05:03] simple and affordable SSD cloud hosting, DigitalOcean is dedicated to building out a strong

[00:05:08] community and supports open source software. They offer a vast collection of hosting tutorials and

[00:05:14] invite developers to submit articles, and they pay $50 per published piece. Deploy your SSD cloud

[00:05:21] server with DigitalOcean today by going to digitalocean.com. Now, DigitalOcean is a

[00:05:26] kind enough to provide Developer Tea listeners a discount of $10 when you use the code

[00:05:31] DEVELOPERTEA. So go to digitalocean.com and use the code DEVELOPERTEA to get $10 off today,

[00:05:37] and you’ll get up and running with your own SSD cloud server in just 55 seconds. That’s

[00:05:43] digitalocean.com. So we’ve been talking about shifting our thinking away from trading our time

[00:05:49] for money to trading our knowledge for money or trading who we are, our charisma for money and

[00:05:56] value. If you are delivering a massive amount of value to your boss, in fact, if you are delivering

[00:06:03] more value every year to your boss, then it’s likely that you should be getting a raise every

[00:06:09] year. Now, I want to shy away as far as I can from any sense of entitlement. This is hard work,

[00:06:17] and you shouldn’t feel entitled to anything until you can actually prove your accomplishments and

[00:06:23] until your work is truly measurable.

[00:06:26] Good. And it’s making a difference monetarily for a business. But I want to tell you just a very

[00:06:34] simple way of shifting your proposals, shifting the way that you propose a given project. If

[00:06:40] you’re responding to an RFP, for example, I want to give you a simple shift in language that can

[00:06:46] help you shift yourself away from trading time for money and instead shift into trading value

[00:06:53] for money. That simple shift is just a simple shift in language that can help you shift yourself away

[00:06:56] to simply bill for features instead of time. And the reason that this shift is so important

[00:07:02] is twofold. Number one, estimating time is notoriously hard to do. We’ve talked about

[00:07:09] this on the show many times, and it’s been proven many times over. Estimating time is

[00:07:14] incredibly hard to do. But perhaps the more important piece of this is that if you frame

[00:07:19] the conversation with your potential client in terms of the value that you deliver rather than

[00:07:26] the time that you spend, specifically if you frame the conversation in terms of the actual features

[00:07:32] that you are delivering rather than the time it takes to do that delivery, then your client is

[00:07:39] going to be thinking about the value of those features rather than your hourly rate. I would

[00:07:45] even be so bold as to say, especially if you are an independent contractor, that you should consider

[00:07:52] giving up your hourly rate and instead pursue your hourly rate.

[00:07:56] Now, I also think this is more fair to both sides. I don’t think you’re trying to trick

[00:08:05] anyone into giving you more money. If it takes you a significant amount of time, in fact,

[00:08:10] if it takes you a very long time to develop a feature that provides very little value

[00:08:16] to your customer, if you estimate that it would take significantly less time than it

[00:08:21] does, then you actually aren’t delivering them value and they shouldn’t be delivering

[00:08:26] you value in return. It’s very simple economics in this way. But if you are delivering a high

[00:08:33] amount of value, it doesn’t really matter how long it takes you to deliver that value.

[00:08:38] So it’s a very simple shift. Start billing for the features rather than the time. Now,

[00:08:44] take this with a grain of salt. Of course, you need safety clauses in your contracts that define

[00:08:50] what those features and what the limitations are in terms of time,

[00:08:56] for a given proposal. And this is something where a lot of people go wrong. If they go down this path,

[00:09:02] it turns into an endless cycle of revisions with the client. So be sure that you are taking the

[00:09:10] proper measures to protect yourselves in those situations against an infinite amount of work

[00:09:16] for a finite amount of money. But the principle still stands. If you can begin to shift your

[00:09:24] client away from thinking about your hourly rate, then you’re going to be able to deliver

[00:09:26] your time in relation to money and instead thinking about the value that you are delivering

[00:09:31] in relation to money. I think that would be a major shift for most independent contractors

[00:09:38] in terms of what they are able to generate in income for themselves. That’s a long way of saying

[00:09:45] I think you’re going to make more money and I think your clients are going to be happier

[00:09:49] if you start framing your contract proposals in this way.

[00:09:56] Thanks so much for listening to today’s episode of Developer Tea. I hope it encourages

[00:10:01] you to start coding a little bit earlier because we have all of these resources that are available

[00:10:07] to us. Speaking of resources, check out DigitalOcean, today’s sponsor. They provide a very fast

[00:10:14] and easy way to get up and running with a cloud SSD, just 55 seconds. And if you use

[00:10:20] the code DEVELOPERTEA today, you can get $10 off. So go check that out. All the links are

[00:10:26] in the show notes. Thank you again for listening to today’s episode and until next time, enjoy your tea.

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