Questions

How do you cost application development?

+
0 Votes
Locked

How do you cost application development?

bajanpoet
Hi, everyone....

I am trying to get into the world of systems analysis/systems design, but would like to know how to go about costing my projects. I have a potential client who is interested in having me develop an application for her, but I have no idea how to go about giving her a fair price when she asks me how much I would charge.

How do you charge for applications which you design, code, implement and will maintain?
  • +
    0 Votes
    cs

    The time taken to analyse, design, code, test and implement depends on the complexity of the task. The cost of maintenance is often far greater than the original development. If you've not got previous experience it will be difficult to give a realistic estimate accurately.
    The process entails breaking the job into small elements, estimating how long each one will take and then building a price.

    +
    0 Votes
    bajanpoet

    something? In terms of deliverables, I would have to estimate the costs of requirements gathering, etc.?

    +
    0 Votes
    NOW LEFT TR

    don't sound ready for any of this. Perhaps a course or two in the filed may help. What if you fail to deliver / run in to problems. The idea is good but you just don't sound ready.

    +
    0 Votes
    bajanpoet

    but I still want to learn. I've written applications for organizations and friends before as a hobby, but I've never worked for a formal company where I have seen costing in real life. So "failing to deliver/run into problems" is not what I'm worried about. I just want to know how to make my hobby into a business eventually.

    +
    0 Votes
    markcar2000

    Experience in your "hobby" is not good enough. Many people would like to turn their hobbies into dollars but fail miserably when they discover they don't have the business knowledge or skills. The fact that you state you're not worried about failure tells me you're not ready. Errors and Omissions will sink your new business and old hobby very quickly. Consulting without proper preparation is likely to end in disaster.

    If you proceed, protect yourself from personal liability by incorporating.

    +
    0 Votes
    Tony Hopkinson

    including the risk that you might not have identified or correctly assessed all the risks.
    What you know is nowhere near as important as a good appreciation of what you don't.
    You need liability cover, you need a process to document everything. You need the time and resources to manage your end of the project.
    How confident are you of execution, and how much of that is based on real experience, not a feeling.
    One big danger is you could succeed in the project, but fail as a business.
    If I were you, I'd be looking to build up to this sort of level and I'd definitely be sticking myself through some business and project management courses.

    Even with the best management and technical ability possible, there's still a good chance for a disaster of biblical proportions.

    I commend your bravery, but remember most medals are earned posthumously.

    +
    0 Votes
    GT27

    Whilst I agree with TechMail that you sound quite inexperienced and may not be ready, I offer the following advice.
    Simply work out how many days you'll spend on the following:
    - requirements gathering
    - design
    - build
    - test
    - implementation
    Then charge the amount of days by your daily price - check out internet job sites to find out an average daily rate for contractors with similar skills to yours and then you may wish to apply a discount due to your inexperience in this area.
    In terms of maintenance and support, as a really rough guide, on an annual basis, charge 20% of the total development cost.
    I hope this helps and good luck!!

    +
    0 Votes
    jaime_roldan

    What would you include as part of annual maintenance?
    I believe patches (due to bugs found by client or myself)
    What else?

    +
    0 Votes
    al

    You work your butt off preparing and producing the "child", then soon come to realize that all the work getting to the birth was nothing compared to the work involved in changes, training, and "maintenance". Like having children, it can turn out to be a wonderful experience, or it can go sour in a heartbeat.

    Repeating the scenario helps some because you do learn along the way, but even the most experienced of us can have that one "child" that goes bad. You get consumed by this "child" and somehow (hopefully) try to keep the others going at the same time. Look up the definition of "stretched!" and you will see a picture of a "parent" trying to maintain a bad child.

    Also remember that once you have produced your offspring, you are not in complete control anymore. Outside influences will cause required attention on your part. Watch the environment that your "child" is living in. Operating system changes, equipment upgrades, obsolescence, all take their toll in keeping it healthy and viable.

    I say all of this so that you know the suggested 20% to 25% of the selling price per period may or may not meet your needs. Experience will help you set your maintenance price, but 20% is a good starting point.

    +
    0 Votes
    duffersingh2000

    I would suggest using a Layered aproach consider that we break the project up into some layers like :

    Basic Functionality ->
    This would be delivering the basic business functionality through the software. By this I mean all the business processes being done thru various application softwares if any or the basic minimum requirements that the firm would require on a day to day basis.Once this is studied u can quote after estimating the number of days it would take to achieve the minimum basic target.Once achieved it should be treated as a project completion with due payment the next phase would be the next project.

    Enhancements to Current Business Logic -> How the current business logic can be improved . Once this has been done u could estimate (not precisely ofcourse) the profit tht organization would make from this change then base ur next quotation on the basis of that.

    User Enhancements -> These are basically user required facilities which are just add-ons and should idealy be charged on an hourly basis to be kept on a minimum.

    Maintenance -> It should be atleast 10% of the total project cost.

    Note : For this whole thing to work there should be a good coordination between the Client and developer as in what the system will be capable of doing and realistic time frames with enough buffer period after each phase for bug fixes.

    +
    0 Votes
    p_a_bala

    I like duffersingh's approach -- from the business benefits side. Do not estimate low just to ge the work. Let the client share the money saved by your work. Make sure to include the hours you would spend with the client (including any time commuting or communicating) as best as possible. Keep track of these "management hours". This will at least help you estimate and plan the next time round. For the first project try not to get a fixed price project.

    +
    0 Votes
    simaioforos

    (This is the original post, it had a spelling error though and I tried to correct it so I posted it twice by mistake, I am sorry for that.)

    Whatever you decide to charge, if you feel confident that you can complete the process, just do it! Do not hold back!

    You may get underpaid the first one or two times, but the experience you'll gain will help you on your next projects!

    Just make sure you make clear to your clientQ
    1. that you believe you can do it.
    2. that you are inexperienced and so there micht be difficulties.
    3. that you charge less than one normally would, for the above reason.

    The internet is full of experienced people who are happy to help you when you need it.

    Good luck.
    Tassos

    +
    0 Votes
    bajanpoet

    Thanks for that encouragement...

    I am inexperienced in the respect that I've basically just graduated from school, but I've done a couple applications for friends and organisations already at no charge. I was trying to get advice on costing because a friend of mine asked me how long a piece of software I developed before that she knew about took me (around 9 mths, coz I was doing it while working and studying at the same time!) and then she wanted to know how much I would charge to develop a solution for her. So I didn't know how to answer - and decided to find out.

    +
    0 Votes
    simaioforos

    Whatever you decide to charge, if you feel confident that you can complete the process, just do it! Do not hold back!

    You may get underpaid the first one or two times, but the experience you'll gain will help you on your next projects!

    Just make sure you make clear to your client
    1. that you believe you can do it.
    2. that you are inexperienced and so there might be difficulties.
    3. that you charge less than one normally would, for the above reason.

    The internet is full of experienced people who are happy to help you when you need it.

    Good luck.
    Tassos

    +
    0 Votes
    p_a_bala

    This will help you in future projects, but can also help you justify to the client that you need more time if it is required.

    But go for it.

    +
    0 Votes
    apapaleo

    I work at a fairly large ($200M)software and data warehousing company.
    We have to hear from all functional teams in terms of their estimates of costs before a project is approved.
    Internal costs must be covered, then marked up to provide sufficient overall revenue to justify developent of the product.
    Requirements gathering / eliciting form your client is the MOST important yet least expensive part of the job.
    Figure you need to charge $35-40/hour for requirements-elicitation meetngs. But you would never be able to sell that to the customer, so you have to build that into to your total price. Figure 1-2 days time for a simple job, 3-5 days for medium-complexity job, and for a complex job, figure 10 days. If you can't get all the basic requirements done after 400 hours, you're no good. This time includes meeting with the customer, taking notes, brainstorming and producing finished functional requirements and use case docs.
    Development -- actual time spent writing code, testing and QA: Whatever you figure for writing the code, figure at least twice that amount of time for testing and QA.
    What we charge our customers for dev is always negotiated so there is no set price, but a good rule of thumb is $120/hr.
    We retain ownership of everything so maintenance and support is built into long-term contracts. But in my experience in work-for-hire like you seem to be doing, figure supporting and bug fixing to be a headaxhe if you are small shop -- you should provide a warranty period of 30-90 daysw where you agree to fix any defect for free, and then after wards include it in a support package. Decide what you want to make per hour as a Tech Support Rep on your product. Offer a 1-year contract based on that. Don't go beyond one-year agreements until you have resources and experience.
    Good luck.

    +
    0 Votes
    bajanpoet

    and very appreciated. Thank you.

    +
    0 Votes
    Tampa Hillbilly

    I totally disagree. Anybody can write bad code. I tell my customers that I fix coding errors for free. Forever. I honored this rule a year after a project went into production. Customer (big paper company) asked how much they owed me. I said nothing, I don't charge to fix my mistakes. When I use them as a reference, I already know what they will say.

    +
    0 Votes
    Realvdude

    if your friend is not in a hurry and doesn't need to tie you into a contract for the job. Having done some consulting work and working with consultants in a professional environment, you are both in a win-win situation.
    My first design and build was for an acquaintance, and I was automating some manual IT tasks. I had the advantage of working after hours on this and charged double my working rate. I did not charge for time I spent expanding my skills for the task. The project took 3 months and cost $1200. Maintenance and bug fixes were hourly. After my project was running, he spent $4000 for a mainframe addon to a current application to automate the rest of the process; which took the vendor 4 weeks to code and deliver. I've done a number of projects for him since, so I'm sure that he was pleased with the arrangement.
    The company that I have work for now hired out a major project with a substantial price tag. In the end the project went over budget and we took it inhouse to complete even though it meant hiring new staff. The point here is to take the time to evaluate the requirements and over estimate. Your friend (and most clients) will more appreciate that you came in under budget, than running over and requesting more money. Carl Sewall a businessman who published some wisdom on doing business, had a motto, "under promise and over deliver". The meaning behind this was don't promise what you may not be able to deliver and deliver more than you promised. He owns car dealerships in southwest USA and whether it was a Cadillac or a Yugo you bought from him, he always had a loaner car when yours needed service. I'm sure that you will be able to lay out a good working relationship with your friend from which you will gain insight on quoting the next job.

    +
    0 Votes
    unni_kcpm

    Dear _

    Few points to note.

    1. You should be offering a contractual
    type working or otherwise.
    In former one, you should put yourself
    everything i.e. discussion points,
    finalised points and many completed or
    incompleted things while dealing with
    your Client.
    In latter case, you might get enough
    time to ponder of the manual processes
    which you have to automate.
    2. Once you are sure to do the things
    (once you complete requirements
    gathering), you can apply the
    calculations of pricing which our
    experienced persons have given
    you above and with a bit of discounting.
    3. If you are informal, you can take
    this a stepping stone to your business
    and can learn how formal business
    process functions which will add mileage
    to your profile to your next client.
    4. Also cost can be based on the
    platform/technology used alongwith other
    factors like time, efforts etc.

    Best Wishes !

    +
    0 Votes
    The_M0nk

    It's well and good getting into this type of verbal agreement, but what happens if things go slightly adrift?

    You will need to cover both your self and your client with a written agreement/contract that states exactly what you are going to deliver and what the time spans for each deliverable are. And you will need to include what is covered by the maintenance agreement.

    Don't forget to document all your work as you go along. This can help you a year down the road when you are asked to make an amendment to the system that you've developed.

    Best of Luck.

    +
    0 Votes
    bajanpoet

    When my potential client is ready (we were just batting around an idea for a solution she may want sometime soon) these ideas about discounting and setting out a timeline in a formal contract will definitely be an asset!

    +
    0 Votes
    info

    When preparing your offer, one thing is to consider the cost, by quoting your work.
    Another thing is to get a good idea of what the MARKET is ready to pay for.
    The basics of marketing says: it's the market who decides the price, not you.
    When both your cost and the market price match, it's worth doing. When they don't, think twice before starting the job.

    This is particularly true in a competitive environment; on the contrary, if you plan to make something very specific, of very taylored, then there may be just no competition. This may justify offering a price that corresponds to your cost + margin.

    But be very careful when you consider your competition!

    Second, assess carefully the SIZE of your market. If you can sell what you do to 2 customers, you may offer it for twice cheaper. That could turn your offer into something more affordable for the customer.

    Good luck!

    +
    0 Votes
    ak2consulting

    You have received some excellent abstract structures to organize your thinking. I am going to give you 5 killer concrete guidelines to costing & negotiating the contract out.

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their then you BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then total x 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to through at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for th Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process save your bacon (You have to have built trust by

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.

    +
    0 Votes
    ak2consulting

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their & then BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then x total 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to throw at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for the Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process the client save's your bacon (You have to have built trust by being honest with them when you have hit a wall and are spinning your wheels), usually their needs to be a redefinition of what they need & wan't. and which is mandatory or just desired.

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.

    +
    0 Votes
    ak2consulting

    KISS-5 Rules of thumb Final draft final sorry
    You have received some excellent abstract structures to organize your thinking. I am going to give you 5 killer concrete guidelines to costing & negotiating the contract out.

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their & then BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then x total 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to throw at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for the Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process the client save's your bacon (You have to have built trust by being honest with them when you have hit a wall and are spinning your wheels & their billable hours), usually their needs to be a redefinition of what they need & wan't. and which is mandatory or just desired.

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.

  • +
    0 Votes
    cs

    The time taken to analyse, design, code, test and implement depends on the complexity of the task. The cost of maintenance is often far greater than the original development. If you've not got previous experience it will be difficult to give a realistic estimate accurately.
    The process entails breaking the job into small elements, estimating how long each one will take and then building a price.

    +
    0 Votes
    bajanpoet

    something? In terms of deliverables, I would have to estimate the costs of requirements gathering, etc.?

    +
    0 Votes
    NOW LEFT TR

    don't sound ready for any of this. Perhaps a course or two in the filed may help. What if you fail to deliver / run in to problems. The idea is good but you just don't sound ready.

    +
    0 Votes
    bajanpoet

    but I still want to learn. I've written applications for organizations and friends before as a hobby, but I've never worked for a formal company where I have seen costing in real life. So "failing to deliver/run into problems" is not what I'm worried about. I just want to know how to make my hobby into a business eventually.

    +
    0 Votes
    markcar2000

    Experience in your "hobby" is not good enough. Many people would like to turn their hobbies into dollars but fail miserably when they discover they don't have the business knowledge or skills. The fact that you state you're not worried about failure tells me you're not ready. Errors and Omissions will sink your new business and old hobby very quickly. Consulting without proper preparation is likely to end in disaster.

    If you proceed, protect yourself from personal liability by incorporating.

    +
    0 Votes
    Tony Hopkinson

    including the risk that you might not have identified or correctly assessed all the risks.
    What you know is nowhere near as important as a good appreciation of what you don't.
    You need liability cover, you need a process to document everything. You need the time and resources to manage your end of the project.
    How confident are you of execution, and how much of that is based on real experience, not a feeling.
    One big danger is you could succeed in the project, but fail as a business.
    If I were you, I'd be looking to build up to this sort of level and I'd definitely be sticking myself through some business and project management courses.

    Even with the best management and technical ability possible, there's still a good chance for a disaster of biblical proportions.

    I commend your bravery, but remember most medals are earned posthumously.

    +
    0 Votes
    GT27

    Whilst I agree with TechMail that you sound quite inexperienced and may not be ready, I offer the following advice.
    Simply work out how many days you'll spend on the following:
    - requirements gathering
    - design
    - build
    - test
    - implementation
    Then charge the amount of days by your daily price - check out internet job sites to find out an average daily rate for contractors with similar skills to yours and then you may wish to apply a discount due to your inexperience in this area.
    In terms of maintenance and support, as a really rough guide, on an annual basis, charge 20% of the total development cost.
    I hope this helps and good luck!!

    +
    0 Votes
    jaime_roldan

    What would you include as part of annual maintenance?
    I believe patches (due to bugs found by client or myself)
    What else?

    +
    0 Votes
    al

    You work your butt off preparing and producing the "child", then soon come to realize that all the work getting to the birth was nothing compared to the work involved in changes, training, and "maintenance". Like having children, it can turn out to be a wonderful experience, or it can go sour in a heartbeat.

    Repeating the scenario helps some because you do learn along the way, but even the most experienced of us can have that one "child" that goes bad. You get consumed by this "child" and somehow (hopefully) try to keep the others going at the same time. Look up the definition of "stretched!" and you will see a picture of a "parent" trying to maintain a bad child.

    Also remember that once you have produced your offspring, you are not in complete control anymore. Outside influences will cause required attention on your part. Watch the environment that your "child" is living in. Operating system changes, equipment upgrades, obsolescence, all take their toll in keeping it healthy and viable.

    I say all of this so that you know the suggested 20% to 25% of the selling price per period may or may not meet your needs. Experience will help you set your maintenance price, but 20% is a good starting point.

    +
    0 Votes
    duffersingh2000

    I would suggest using a Layered aproach consider that we break the project up into some layers like :

    Basic Functionality ->
    This would be delivering the basic business functionality through the software. By this I mean all the business processes being done thru various application softwares if any or the basic minimum requirements that the firm would require on a day to day basis.Once this is studied u can quote after estimating the number of days it would take to achieve the minimum basic target.Once achieved it should be treated as a project completion with due payment the next phase would be the next project.

    Enhancements to Current Business Logic -> How the current business logic can be improved . Once this has been done u could estimate (not precisely ofcourse) the profit tht organization would make from this change then base ur next quotation on the basis of that.

    User Enhancements -> These are basically user required facilities which are just add-ons and should idealy be charged on an hourly basis to be kept on a minimum.

    Maintenance -> It should be atleast 10% of the total project cost.

    Note : For this whole thing to work there should be a good coordination between the Client and developer as in what the system will be capable of doing and realistic time frames with enough buffer period after each phase for bug fixes.

    +
    0 Votes
    p_a_bala

    I like duffersingh's approach -- from the business benefits side. Do not estimate low just to ge the work. Let the client share the money saved by your work. Make sure to include the hours you would spend with the client (including any time commuting or communicating) as best as possible. Keep track of these "management hours". This will at least help you estimate and plan the next time round. For the first project try not to get a fixed price project.

    +
    0 Votes
    simaioforos

    (This is the original post, it had a spelling error though and I tried to correct it so I posted it twice by mistake, I am sorry for that.)

    Whatever you decide to charge, if you feel confident that you can complete the process, just do it! Do not hold back!

    You may get underpaid the first one or two times, but the experience you'll gain will help you on your next projects!

    Just make sure you make clear to your clientQ
    1. that you believe you can do it.
    2. that you are inexperienced and so there micht be difficulties.
    3. that you charge less than one normally would, for the above reason.

    The internet is full of experienced people who are happy to help you when you need it.

    Good luck.
    Tassos

    +
    0 Votes
    bajanpoet

    Thanks for that encouragement...

    I am inexperienced in the respect that I've basically just graduated from school, but I've done a couple applications for friends and organisations already at no charge. I was trying to get advice on costing because a friend of mine asked me how long a piece of software I developed before that she knew about took me (around 9 mths, coz I was doing it while working and studying at the same time!) and then she wanted to know how much I would charge to develop a solution for her. So I didn't know how to answer - and decided to find out.

    +
    0 Votes
    simaioforos

    Whatever you decide to charge, if you feel confident that you can complete the process, just do it! Do not hold back!

    You may get underpaid the first one or two times, but the experience you'll gain will help you on your next projects!

    Just make sure you make clear to your client
    1. that you believe you can do it.
    2. that you are inexperienced and so there might be difficulties.
    3. that you charge less than one normally would, for the above reason.

    The internet is full of experienced people who are happy to help you when you need it.

    Good luck.
    Tassos

    +
    0 Votes
    p_a_bala

    This will help you in future projects, but can also help you justify to the client that you need more time if it is required.

    But go for it.

    +
    0 Votes
    apapaleo

    I work at a fairly large ($200M)software and data warehousing company.
    We have to hear from all functional teams in terms of their estimates of costs before a project is approved.
    Internal costs must be covered, then marked up to provide sufficient overall revenue to justify developent of the product.
    Requirements gathering / eliciting form your client is the MOST important yet least expensive part of the job.
    Figure you need to charge $35-40/hour for requirements-elicitation meetngs. But you would never be able to sell that to the customer, so you have to build that into to your total price. Figure 1-2 days time for a simple job, 3-5 days for medium-complexity job, and for a complex job, figure 10 days. If you can't get all the basic requirements done after 400 hours, you're no good. This time includes meeting with the customer, taking notes, brainstorming and producing finished functional requirements and use case docs.
    Development -- actual time spent writing code, testing and QA: Whatever you figure for writing the code, figure at least twice that amount of time for testing and QA.
    What we charge our customers for dev is always negotiated so there is no set price, but a good rule of thumb is $120/hr.
    We retain ownership of everything so maintenance and support is built into long-term contracts. But in my experience in work-for-hire like you seem to be doing, figure supporting and bug fixing to be a headaxhe if you are small shop -- you should provide a warranty period of 30-90 daysw where you agree to fix any defect for free, and then after wards include it in a support package. Decide what you want to make per hour as a Tech Support Rep on your product. Offer a 1-year contract based on that. Don't go beyond one-year agreements until you have resources and experience.
    Good luck.

    +
    0 Votes
    bajanpoet

    and very appreciated. Thank you.

    +
    0 Votes
    Tampa Hillbilly

    I totally disagree. Anybody can write bad code. I tell my customers that I fix coding errors for free. Forever. I honored this rule a year after a project went into production. Customer (big paper company) asked how much they owed me. I said nothing, I don't charge to fix my mistakes. When I use them as a reference, I already know what they will say.

    +
    0 Votes
    Realvdude

    if your friend is not in a hurry and doesn't need to tie you into a contract for the job. Having done some consulting work and working with consultants in a professional environment, you are both in a win-win situation.
    My first design and build was for an acquaintance, and I was automating some manual IT tasks. I had the advantage of working after hours on this and charged double my working rate. I did not charge for time I spent expanding my skills for the task. The project took 3 months and cost $1200. Maintenance and bug fixes were hourly. After my project was running, he spent $4000 for a mainframe addon to a current application to automate the rest of the process; which took the vendor 4 weeks to code and deliver. I've done a number of projects for him since, so I'm sure that he was pleased with the arrangement.
    The company that I have work for now hired out a major project with a substantial price tag. In the end the project went over budget and we took it inhouse to complete even though it meant hiring new staff. The point here is to take the time to evaluate the requirements and over estimate. Your friend (and most clients) will more appreciate that you came in under budget, than running over and requesting more money. Carl Sewall a businessman who published some wisdom on doing business, had a motto, "under promise and over deliver". The meaning behind this was don't promise what you may not be able to deliver and deliver more than you promised. He owns car dealerships in southwest USA and whether it was a Cadillac or a Yugo you bought from him, he always had a loaner car when yours needed service. I'm sure that you will be able to lay out a good working relationship with your friend from which you will gain insight on quoting the next job.

    +
    0 Votes
    unni_kcpm

    Dear _

    Few points to note.

    1. You should be offering a contractual
    type working or otherwise.
    In former one, you should put yourself
    everything i.e. discussion points,
    finalised points and many completed or
    incompleted things while dealing with
    your Client.
    In latter case, you might get enough
    time to ponder of the manual processes
    which you have to automate.
    2. Once you are sure to do the things
    (once you complete requirements
    gathering), you can apply the
    calculations of pricing which our
    experienced persons have given
    you above and with a bit of discounting.
    3. If you are informal, you can take
    this a stepping stone to your business
    and can learn how formal business
    process functions which will add mileage
    to your profile to your next client.
    4. Also cost can be based on the
    platform/technology used alongwith other
    factors like time, efforts etc.

    Best Wishes !

    +
    0 Votes
    The_M0nk

    It's well and good getting into this type of verbal agreement, but what happens if things go slightly adrift?

    You will need to cover both your self and your client with a written agreement/contract that states exactly what you are going to deliver and what the time spans for each deliverable are. And you will need to include what is covered by the maintenance agreement.

    Don't forget to document all your work as you go along. This can help you a year down the road when you are asked to make an amendment to the system that you've developed.

    Best of Luck.

    +
    0 Votes
    bajanpoet

    When my potential client is ready (we were just batting around an idea for a solution she may want sometime soon) these ideas about discounting and setting out a timeline in a formal contract will definitely be an asset!

    +
    0 Votes
    info

    When preparing your offer, one thing is to consider the cost, by quoting your work.
    Another thing is to get a good idea of what the MARKET is ready to pay for.
    The basics of marketing says: it's the market who decides the price, not you.
    When both your cost and the market price match, it's worth doing. When they don't, think twice before starting the job.

    This is particularly true in a competitive environment; on the contrary, if you plan to make something very specific, of very taylored, then there may be just no competition. This may justify offering a price that corresponds to your cost + margin.

    But be very careful when you consider your competition!

    Second, assess carefully the SIZE of your market. If you can sell what you do to 2 customers, you may offer it for twice cheaper. That could turn your offer into something more affordable for the customer.

    Good luck!

    +
    0 Votes
    ak2consulting

    You have received some excellent abstract structures to organize your thinking. I am going to give you 5 killer concrete guidelines to costing & negotiating the contract out.

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their then you BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then total x 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to through at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for th Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process save your bacon (You have to have built trust by

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.

    +
    0 Votes
    ak2consulting

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their & then BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then x total 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to throw at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for the Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process the client save's your bacon (You have to have built trust by being honest with them when you have hit a wall and are spinning your wheels), usually their needs to be a redefinition of what they need & wan't. and which is mandatory or just desired.

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.

    +
    0 Votes
    ak2consulting

    KISS-5 Rules of thumb Final draft final sorry
    You have received some excellent abstract structures to organize your thinking. I am going to give you 5 killer concrete guidelines to costing & negotiating the contract out.

    1) Use the Project Definition Template on Techrepublic to find what specific outcome they want the app to be able to accomplish with features, SPECIFIC performance benchmarks (like load 100,000 page views in under 30 seconds), and example sites that they like for points of departure for the elements of the final solution. Have them sign off on every thing and at each step of the design & communicate challenges with the client ASAP. Collaborate & have the client help you make them happy. Be constructively LAZY.

    2) Find out what industry scale is in your area for your level of experience. In the Bay it is $250/ hr. for a TOP Project managed web application development project. Start Their & then BID THEIR Budget. Try to design a SOLUTION TO FIT THEIR Budget, constraints,challenges and Needs.

    3) Next calculate how many hours it will take YOU to do the Project and then x total 2.2 because this is average overrun of time on technology projects. Put 20% of the resources you receive to the side to throw at the inevitable unexpected hickup. Turn it into an opportunity to design a superior solution.

    4) After calculating what you would like for the Project, and what you need to be able to do the project (including expenses & the credits you give the client for doing the project in a way that makes it easier for you) try to be generous to your client so when you err (And you will!!!) they will overlook it Because you gave them LOVE!!!!! Also they will at some point in the Process the client save's your bacon (You have to have built trust by being honest with them when you have hit a wall and are spinning your wheels & their billable hours), usually their needs to be a redefinition of what they need & wan't. and which is mandatory or just desired.

    5) Use your network to find the solution to the inevitable problems. You don't know everything but your circle's circle can find out anything.