Help request - Pricing

[Toby A Inkster]

They're now asking for a price, and I have no idea.

As well as what others have posted, you should bear in mind that, thanks
to your modular approach, you may be able to use parts of the application
in future projects.

You may want to consider that and reduce your price accordingly, though
make sure you have it in writing that you are allowed to reuse the modules
for other companies and indeed the "glue" between modules.

 

[nice.guy.nige]

Tina - AffordableHOST.com wrote: [...]

I don't care if I'm doing a job for my best friend. I'm getting a
signed contract to cover my butt and to make sure there are no
unintentional misunderstandings.

Would anyone sign a contract that said my estimate was 50 hours but
that might actually be 300 because I don't really know yet? How
would I approach someone with that? It's scary stuff from where I'm
sitting!

In a previous post you said "I initially estimated it would take about 50
hours, and we talked about a figure like £2000 (I'm in the UK) but never
decided on anything concrete. The system spec has changed a lot and there
are so many features in it far beyond their expectations (but nothing that
they didn't ask for or approve my suggestion of).", so, your original spec
suggested 50 hours work. Fair enough, draw up a contract on those terms and
include a clause that says "agreed changes to the specification may incur
more work and increase the cost at my rate of £x / hour" or words to that
effect. You say that all the added work was "nothing that they didn't ask
for.." so if they asked for more than in the original spec, then put it in
writing that this will take roughly n hours at £x/hour and get their written
approval that they will pay for that before proceeding. You finish that
sentence off with "... or approve my suggestion of", so again, although this
time you have proposed a change to the specification they have agreed to it.
Put it in writing again that this will take longer than the original spec,
and so cost more, and again get their written approval.

To put it in a nutshell, make sure you have a contract to start with, so
both parties know their rights and responsibilities. Then make sure that you
keep a paper trail of any changes to the original specification, with your
written proposal and their written authorisation.

Also, I trust you will be letting Inland Revenue know about this?? ;-)

Cheers,
Nige

--
Nigel Moss.

Email address is not valid. (e-mail address removed). Take the dog out!
http://www.nigenet.org.uk | Boycott E$$O!! http://www.stopesso.com
In the land of the blind, the one-eyed man is very, very busy!

 

[William Park]

Sorry guys, I should have been a bit clearer. I am "temping" at this place
while looking for proper web work although I have been there for the past 6
months.

Okey, this clears up few things. You can charge by hour or by project.

But, your option is limited, because you're an employee and they own it,
totally and forever. So, I think, on-going technical support is what
they are looking for, in which case, hourly fee is the norm. Who
knows... they may decide it's cheaper just to hire you fulltime.

If they decide to sell your system to other companies, then they may
want to hire you as contractor to recreate the system and provide
support. Again, hourly fee. Choose the high-end of the scale.

Good luck,

 

[Andy Dingley]

They're now asking for a price, and I have no idea. I must have done about
300 hours of work on this project,

Take their best offer over $5.

If they're in a generous mood, they won't laugh too much when you
realise how much more you could have made by working in McDonalds for
this time.

Two month's solid work, and you didn't talk seriously about pricing
_before_ working ?!?! You're screwed....

 

[Andy Dingley]

Why did I not get a contract? Because they're not going to screw me over.

And fish live in trees and eat pencils.

Sorry guys, I should have been a bit clearer. I am "temping" at this place

So, under UK law they already own it.

It can be said that they like me.

I'm not surprised !

they are going to ask their IT people (who are an outside company) what a
fair price is, and we are going to exchange those numbers and have a chat
about it on Wednesday.

This sounds like your best option. Forget the "time plus" ruling, and
try to sell it to them on a basis of "If it cost <foo>, would you buy
one ?", with the alternative being that you very rapidly lose
interest, the code gets bit-rot and you all lose out.

In this case, your pricing must be entirely based on perceived benefit
to them, not on the cost for you to produce it.

To be honest, it's probably not worth what it cost to write - software
very rarely is (anyone's). The profit from software only comes from
selling the same thing over and over again (or else government
contracts). The good thing is that this replication is cheap, if you
have the market.

If I take the amount of money this system saves them and divide it by 10,
I'd never have to work again.

About a dozen years ago, I did a similar amount of work "on spec".
They loved it, they're going to order it as soon as the start of the
next financial year, and it has saved them a few million.

Still waiting for that call.....

 

[Andrew Cameron]

So, under UK law they already own it.

No, they don't. I developed it entirely at home, in my own time, and the
last few pieces of personalisation for the company's version of it were done
in their time, but still while under my regular contract (which means that
they accepted no responsibility for what I was doing in that time in regard
to the application).

To be honest, it's probably not worth what it cost to write - software
very rarely is (anyone's).

It cost me pretty much nothing to write. They will be paying for my
personal time, skill, and the money I save them.

 

[Andy Dingley]

No, they don't. I developed it entirely at home, in my own time, and the
last few pieces of personalisation for the company's version of it were done
in their time,

They already have it up and running, you were under contract to them
at the time. They own it.

Can you afford to argue otherwise ?

Have you read your existing contract ? Chances are that in the absence
of agreement to the contrary, standard IT company boilerplate means
that they really _do_ own it, not just in practical terms.

 

[SAZ]

As others have pointed you, you *really* should have agreed to this ahead of
time.

If I were you, though, I would really fight to get at least $6000.
300hr($20/hr)=$6000, and $20/hr is a *really*, *REALLY* good hourly rate for
a project like you described. But, as others have said, you really don't
have much a choice at this point - I mean; you basically either take what
they offer, or walk away with nothing. :-(

Triple that would be closer to fair.

 

[Marc Nadeau]

Disco Octopus a schtroumphé:

Andrew Cameron typed:
......

Not sure, but in this world, you should put a dollar value on
your single hour of work, and multiply that by 300...

IE. if you are worth 10 per hour, then $3000 is what you
charge. if you are worth $150 per hour then you should charge
$45,000.

It is possible to charge only a part of your hourly rate if you
think that a large part of the code can be
reused/recycled/resold for an other similar project. Also take
into consideration your lack of experience and that you may
work slower than a seasoned programmer.

It is recommended to negociate the price _before_ having the job
done.

Pricing is somewhat subjective. Too expensive you loose clients,
too cheap you work for nothing.

Bonne chance!

 

[Andrew Cameron]

They already have it up and running, you were under contract to them
at the time. They own it.

Can you afford to argue otherwise ?

They don't *want* to own it. They're not a software company, and they made
it very clear that they didn't want this project to be part of my temporary
contract (on the basis that it would not be fair to the temp agency under
their contract - because I'm not there to do that coding and they don't want
me to be). I was initially hired to do photocopying! Even now, during
these final stages, the agreement is that I should do no work on it that
interferes with the temp job I'm doing. I'm certainly not under any kind of
IT contract, not even a generic one.

 

[Andrew Banks]

Regardless, of what you say.

If you did any work on it during their time (which you have) they then own
the work you did in that time.

 

[Mark Parnell]

They don't *want* to own it.

I suggest you get something in writing to that effect before you even
think of selling it to someone else. They may decide they want to when
they realise there is money to be made from it, and from what you have
said, they would have every right to.

 

[Andrew Cameron]

Regardless, of what you say.

If you did any work on it during their time (which you have) they
then own the work you did in that time.

If they do, then it's no more than the "personal" aspects that apply only to
them. If I resold it to someone else, and had to do some more work in the
deployment environment to tailor it to them, are you saying that they would
own that work? Even if I was freelance and working for £40/hr to do said
work? If so, are you saying that any work you do under someone else's roof
is owned by them? Even if they don't want to own it and are clearly handing
me a ball to run with and resell?

Also, because they have made it clear that they don't want to own it, I will
take this into consideration in the price. Do you have a price suggestion,
or are you just planning to be contentious for the remainder of this thread?

 

[Andrew Cameron]

I suggest you get something in writing to that effect before you even
think of selling it to someone else. They may decide they want to when
they realise there is money to be made from it, and from what you have
said, they would have every right to.

We have already discussed reselling it and they are happy for me to go own
and make money from it. They have absolutely no interest in future money
from it as they are in no way an IT company. At one point I even asked if
they would resell it with me and they declined because " we aren't a
software company".

This is a small company of about 17 people, by the way.

 

[Mark Parnell]

We have already discussed reselling it and they are happy for me to go own
and make money from it.

Then they shouldn't have any problems putting that in writing.
Regardless of what they say, I would still recommend you get it in
writing to protect yourself. That way you know you are covered.

As I said, if they don't care then it shouldn't be an issue to get it in
writing.

 

[Andrew Cameron]

Then they shouldn't have any problems putting that in writing.
Regardless of what they say, I would still recommend you get it in
writing to protect yourself. That way you know you are covered.

As I said, if they don't care then it shouldn't be an issue to get it
in writing.

Thank you for actually believing me, Mark; I'll make sure to get it in
writing. As of this morning, I think we have an agreement of £5000. Not
bad for something that I enjoyed doing!

 

[Andrew Banks]

Thank you for actually believing me, Mark; I'll make sure to get it in

writing. As of this morning, I think we have an agreement of £5000. Not
bad for something that I enjoyed doing!

So all in all an hourly rate of £16-17/hour?

Not bad going at all Andrew, better than I expected you'd get.

Now what to spend it on?

 

[Andrew Cameron]

So all in all an hourly rate of £16-17/hour?

Doesn't sound like much but for the enjoyment and experience I have gained,
well worth it IMO.

Not bad going at all Andrew, better than I expected you'd get.

Thank you. I quoted the poster in this thread who said "from a company 20k,
freelance 7.5k" and added "so I was thinking 5k". Turns out that that was
the figure they were going to suggest if I was unable to come up with one.

Now what to spend it on?

Indeed! Although saving is always good... ;-)

 

[William Park]

Thank you for actually believing me, Mark; I'll make sure to get it in
writing. As of this morning, I think we have an agreement of ?5000. Not
bad for something that I enjoyed doing!

Now, they own it for sure. Not only did they pay for your time, access
to hardware and facility, when you were coding. But, they also
explicitly paid for the software (ie. exchange of consideration).

"Therefore, Your Worship, we intent to exercise our intellectual
property and copyrights to the full extent of law. We don't believe the
plaintiff, Mr. Cameron, has any ground to stand on."

 

[Andrew Cameron]

Now, they own it for sure. Not only did they pay for your time,
access to hardware and facility, when you were coding. But, they also
explicitly paid for the software (ie. exchange of consideration).

Well, they haven't actually paid me yet, and when they do, the invoice I
give them will detail what they get - a license to use the software - and
what I get - money and a full ownership of the product to do what I want
with. At one time, I even offered that they take part ownership, sell it on
to other companies and give me a reasonable 15% but they declined because
software is not what they do. They have no place to make any money out of
software whatsoever. Perhaps another company would chew my balls off, but
it's not going to happen in this case. I understand that a lot of these
replies come with a lot of bitterness from being screwed over in the past,
so it's hard to get past that to see my actual situation.

What they are paying for is a tailored solution - if I was to sell a generic
version with no enhancements to another company, I would probably charge
something in the region of £1500 including setup (installing of PHP, mySQL
and a web server if needs be) but again for enhancements the company would
have to pay for those enhancements. That doesn't mean they own that part of
the code, just a license to use the part of the code that I made for them.
I don't think people are quite understanding me here... I did all the coding
I could (other than the parts that needed to be done just for them in the
deployment environment) in my own time, at home, on my own equipment, with
my own food and light and heat and dog. All totally seperate from the
relatively unskilled work I did for them during the day.

When they sue me and take all my money because they are evil and BigCo-like,
I'll make sure to post here so you can mock me accordingly, 'kay?