Help with pricing project
I am an independent consultant and I have a project with a client. I don't know how to put a price on it. I mentioned that we can do either hourly or fixed price project. They said that it would be better to do everything in 2 week sprints on a fixed price.
I don't know how much to price the project. Should I ask for $5k-$10k per week? The project is very important to the client, meaning that he is getting great value out of it. It is a programming task for a very niche area and I bring great domain expertise which is crucial. I estimate it will take me 3 months to complete.
On the other hand I'm a bit afraid to do it as a fixed price because I might underestimate as it often happens.
Are there any resources to read that can help me with this?
This podcast episode is perfect for you right now: https://www.indiehackers.com/podcast/014-brennan-dunn-of-double-your-freelancing
There is not much detail here to give appropriate inputs.
There are definitely tons of content online on how to price a software project. This is just one example.
https://www.pmi.org/learning/library/challenges-fixed-price-contracts-9640
I think you can base the price on following points.
Not sure if this adds any useful input to you. If you can post more details you may get more valuable input.
Thanks, this helps!
It is a programming task for a very niche area and I bring great domain expertise which is crucial. I added it to the original post.
I've also heard of charging extra for a client who's in a hurry. How much should I charge extra?
It depends on how critical the project is to them.
For some projects some clients may have to pay fine of the order of $250 Million to government if they don't get this new app running in given timeline, in that case you can quote higher value if you are building such a project in 3 months for them.
I think you need to do analysis from business point of view of client from a higher perspective. The application that you build, what value is it going to add to the client. How the client plans to use it.
See if you can arrive at a number that is a percentage of the profit that they will make out of this project.
if they will profit $1 Million
Client Profit/ Year - 1,000,000
Your target - 10% - 100,000
Your target - 5% - 50,000
I am not sure what percent it could be for a independent consultant. But anything less than 5 should be totally fine and based on other params you can shoot till 10.
Does it make them $1M or does that prevent their loss of $1M?
I don't think we can explicitly communicate with client on these details, but these can be factored into the analysis while arriving at the right numbers.
Sometimes if its really a critical project quoting a lower number also may raise some questions of quality and make it sound you are putting in less resources into it for such a critical project, be it time or people.
Based on your hourly rate seems like for this project your base number should be $60,000. Why are you thinking of 30k to 60k? I hope you have other parallel projects in pipeline in case this doesn't go well. Hoping they are hourly paid and given your expertise i would assume you will anyways make this $60,000 in that 3 months, with or without this project. You can quote to client you have other project lined up if you are not able to hit that number.
So i think you should begin at 60k and its always safe to quote a range than number so you say it can take anywhere from 60k to 100k and you will need to figure out some more details before you can narrow down on a specific range in that number.
If you are closer to client you can even ask/say if any one else has quoted a lesser number than this for this project then you will think about it and come back.
Thanks, this is reassuring. Your suggestions are very helpful.
It is super critical to them. It is one of the central pieces of the bigger application. Judging from their responses they can't get it elsewhere easily (not on time or not without some serious searching effort).
I already thought a lot from the perspective of "how much will they sell it"/how much value are they getting.
They have some big clients but I have no idea what they will make out of it. Also there's no way I can find out and I guess they wouldn't share it that information. Is there a known trick/method to get an estimate of this without sounding too "nosy"?
Also how do I present this in my proposal? I'm not sure how to "organize payment".
Should I mention the big fat number from the start? Should I get a fixed amount every week? Should I do hourly?
The opportunity is good but I have to work up the nerve to ask for a number that is minimum 6x my last one. For some reason I get anxious about it.
Should I ask them for their budget or should I mention my number first?
You are welcome. Glad i can be helpful.
Well u r going to be building it so i think u can ask lot of doubts about it. As part of it you can sneak in the question
What are the intended uses of this product?
Should we consider this /that use case?
Would this be utilized in this scenario that scenario?
Let them tell you that it is confidential and they cant share it and then you will hit a reasonable wall and know that you did your best.
I am sure similar product will be available online in some other form or design used by some competitor or some other company. You can see if you can collect any information about it and try to match it with your product.
If they know another similar product in any other company and you talk about it to them then they will know you will be more aware of the overall business of the product and will not look for any shortcuts with you.
I think you can ask anything, i don't think anything will sound nosy so far the source of your question is the application you are gonna build or its relevant to it, just make sure you don't go completely tangential to your application and ask irrelevant questions. You can always ask questions related to the input and output of the product you are gonna build, how else can u make sure u r building the product to the spec.
You should definitely ask them about their budget and i think you shd keep yourself from quoting your number till the very end of the deal, but you can quote a range like... I think it may take from 60k to 100k but i am not sure will have to do more analysis. If you have any budget in mind i can review and see how i can fit myself within that budget and let you know on the feasibility.
You can tell them the more i know about the product i can make it far better and extendable or scalable.
About organizing payment i think you can ask them what options they can provide. A weekly or monthly payment will be good for both parties. You can state your personal expenses and finances and you will be comfortable with a weekly payment to monthly payment.
I think a very generic approach to such scenarios will be to simply present a list of possible options for you and then ask them a list of possible options for them and then sit and workout to find a overlap and go from there.
I also want to ask them things like:
etc.
Those are questions that could wildly alter the price.
I'm not sure how to make all these decisions.
i see this is going in a very different direction than initially thought. Not sure if its a surprise for you too or just me. :)
Have you already started building this?
You can simply tell them since there are lot of parameters involved and since this falls in a different business model you would like to get some clarity on these points just to experiment with what would be the best way to go and simply shoot your questions.
Although without knowing more detail it is very weird for me to predict any more stuff.
So all the best, hope you make it.
It wasn't a surprise for me actually because once I understood that I had leverage, I knew I would have to deal with these but I'm not sure how.
I haven't started building this but I've worked a lot of work on similar things, it's my area of expertise.
Do you know these from your personal experience or have you read about this?
Thanks again, that cleared things up a bit.
I took your advice about the budget and asked them but they replied that they "don't work to a budget but an objective and it's a matter of what can be achieved, when and at what cost. "
I am thinking of following up with some possible scenarios of what can be achieved in what timeframe, like:
option A: 15 days, $15k
option B: 25 days, $30k
etc.
Any further advice/ideas are much appreciated!
OK that is good and in our favor then. We can set the budget. Yeah i think you going on the right track with the different options approach.
You can think of all the different parameters,
the language involved
will u have to use any premium tools to build this
In case you are fine if you can reach me over my email id i would be happy to discuss in more detail, as it seems like you are onto some really good deal and still new to all this. If not we can continue here.
c.arthanari@gmail.com
just curious how ur deal went!