Help request - Pricing

[Andrew Banks]

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

Andrew, just a quick bit of business advice. You've sold it once for £5k -
why now drop your price? You can quite easily sell further licences at this
price.


Go in high and come down in price if needed. But try going in low and
increase your price and it just won'y happen.

Offer it them for £5k and if they say "ooh, a bit more than we expected"
tell them you'll work something out as you want them as a client and give it
them for £3k - both parties are happy.

I know of someone who actually spent 5 years developing a piece of software
and tried seeling it to BT. They weren't interested. He pestered and
pestered and the guy he was speaking to said he didn't want the software and
would never buy it but arranged a meeting just to shut the guy up. BT ended
up buying the software off him at that meeting. They paid him 1p for it.

Not a lot of money for the time he put into it? He's now a millionaire as he
could sell into other business' based on the fatc that BT had bought his
software.

 

[Mark Parnell]

Thank you for actually believing me, Mark;

That's alright.

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

Good for you. Glad you came out of it OK. Now to the business of selling
it to others... ;-)

 

[Eric Bohlman]

Why did I not get a contract? Because they're not going to screw me
over. They actually do want to pay me what's fair for my time, but I

That's bad reasoning. The primary purpose of a contract isn't to keep one
party from screwing the other over (if one of the parties tries that,
things become extremely messy no matter what). It's to make sure that both
parties have the same expectations and know what they can count on. It's
to prevent *misunderstandings* rather than malice. It's to provide
stability and predictability. And it's to legally formalize a committment
(consider what would happen if the client were to suddenly find himself
with excessive debts. Regardless of how good everyone's intentions were,
in the absence of a contract the client can't legally claim that he *has*
to pay you and therefore doesn't have enough money to pay his creditors who
*do* have formal contracts with him. The creditors with contracts will get
priority over you).

 

[Eric Bohlman]

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".

You still have to get it in writing. What if the company changes
ownership? What if the company finds itself in debt and its creditors
start claiming that the program is one of its assets?

 

[nice.guy.nige]

You still have to get it in writing. What if the company changes
ownership? What if the company finds itself in debt and its creditors
start claiming that the program is one of its assets?

This is a *very* good point! The kind words of the most well-meaning
managers and company directors mean absolutley jack when the receivers take
over. I speak from experience (though I wasn't personally affected, but a
colleague in the company was).

Plan for the future - get it in writing!

And well done on the price, Andrew. Sounds like they are a good company to
deal with.

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]

That's bad reasoning.

Indeed. This is complicated by the fact that there are 3 parties -- the
original poster (OP), "client" company, and "temp" agency. Issues are
- is OP an employee or subcontractor to "temp", and what are the
terms of employment/contract between them? Particularly, things
that are done in company time, either "client" or "temp" company's
time.
- issue between "client" and OP is a bit clearer. OP would normally
be considered contractor, and service/product delivered would not
involve any copyright transfer. Unless it was explicitly
commissioned or paid for. (Hence, the company's willingness to
pay for it .
- the biggest issue is between "client" and "temp". Boiler-plate
contract normally exist also. But, "client" can now say they
initially hired OP to do photocoping (something that has nothing
to do with programming), commissioned the software because of
their unrelated needs, and paid for it.

 

[dp]

They were all quality hours; I consider myself at the very least to be
intermediate level at PHP. Obviously I got faster the more I did, but that
was simply me being more comfortable with the way I had written the system
(module-based). It's the first project of this kind I've been in the
position to charge for, not the first that I've built.

Local market conditions affect price. Charge more in NYC, less in Fargo. In
my area, it's $50-$75/hr for an "average" developer.

At this stage however, you may want to consider pricing based upon the costs
you saved them. You noted that you saved them 3 weeks a month. Are those
full person weeks? Is the person at minimum wage, or making $50K/year? Also,
remember that they incur opportunity savings - those three weeks saved can
be invested by them in creating more cash.

You can structure your price around when they receive payback on their
investment. If you saved them 50% of a $1,000/week persons time - they save
$1500/month. If you charge $9K, their payback period is 6 months, and you
worked for $30/hour. Getting payback upon a substantial investment in 6-12
months is a good deal for most companies.

Whatever you wind up charging, make sure they understand your hourly rate
after the project is completed because there will be project tweaks. If the
system requires some sort of ongoing maintenance - e.g. backups, etc..
Settle the price up front. I charge more for post-implementation tweaks and
less for maintenance than my project rate. For some clients, You can be on
retainer for a certain number of hours/qtr at a reduced hourly rate. For
others, You can throw the first 8 hours of post implementation work into the
project cost.
dp