If you are like most people you want to get a general idea of what your project is going to cost before you get started. So how do we figure this out, and what type of pricing models do we use? In our industry it is always easier to estimate smaller projects accurately, but as the scope and complexity increases, estimates become much more difficult. For this reason we offer two pricing models, and the model we use is based on the size of your project.
Small Projects
Okay, let's first define what we mean by a small project. Any project that is going to take 4 months or less, and require no more than one month to define. In reality, probably 75% of our projects fall into this category. For these projects, we provide a fixed-price. We estimate the time your project will take based on our experience with similar projects, and as long as the scope doesn't change that's the price you pay. Simple, huh?
Large Projects
So what's a large project? As you might have guessed, it would be any project that we anticipate will take longer than 4 months to develop, or more than one month to define. For these projects we provide an estimate, but you are invoiced on a time and material (T&M) basis. The reason we do this on larger projects is because there really is no accurate way to estimate these projects, and we believe providing a fixed-price for these projects is unethical. Okay, so let's look at our rates.
Our Rates
We charge two different rates based on who does the work. We charge more for onshore (i.e. USA) personnel because we pay more for these folks. Of course we charge less for offshore (i.e.Indian) personnel for similar reasons. Here's how it breaks down:
Onshore Rates
We charge $150 per hour for all time spent on your project by our onshore (USA) team. This covers Project Management, Consulting, Business Analysis, Programming, System Administration, Installation, etc.
Offshore Rates
We charge $35 per hour for all time spent on your project by our offshore (Indian) team. This primarily covers programming and software testing.
Typical Project Cost and Duration
Every project is unique, so it's almost impossible to throw out a number that will have any relationship to your project. But since you are probably going to ask anyway, here are some ballpark numbers:
Small Projects
The typical small project will take 1-4 months to develop at a cost of around $10,000 to $40,000.
Large Projects
Large projects typically cost $50,000 and up, and take 6 to 12 months to complete.
Of course, your project isn't anything like our typical project, so the best way to find out what your project might cost is to call me. It won't hurt a bit, and you'll have a quote within a couple of days.
Let's Be Honest About Fixed-Price Projects
The phrase "fixed-price" has a nice ring to it. And you probably think "fixed-price" means the price doesn't change, as in it's "fixed". And you'd be 100% wrong. A fixed-price project is for a fixed scope of work, and the second that scope changes your lovely sounding fixed-price project goes out the window. That's why we don't use them for large projects. There is simply no way to anticipate all the changes that can occur over the life of a large, complex project. I believe using this sort of pricing model is unethical because it is a deception. If I know the price isn't going to be $75,000 because I can easily find changes to the original scope, yet I provide a fixed-price quote for that amount, I am deceiving you just to get your money. By the way, I am also placing you in a terrible position, because you won't really have much choice but to pay after the project has started. I just think it is a terrible way to run a business, and an even worse way to treat the customer.
FYI, I would probably budget a little extra (10-15%) for smaller projects as well, because unforseen changes can happen with any size project.