The Lounge - CodeProject

Hey Fellow CP'ers,

Not sure if this is the right place to ask this but I'm sure if it's not then Maunder or any of you kind folks will tell me where to go... Smile | :)

I'm faced with yet another software development proposal and even though I've been in the business for awhile I can never hear enough feedback from the community about this particular thing:

Should I cry hourly or bid on the whole project?

I've been in situations in which I've bid (1994) on a project that ended up making me about $3.00/hr because, since I'm a geek, ended up working about 90-100 hours/week (and got to learn the beginnings of .NET Wink | ;)

).

I've been in other situations in which I got $20/hr for 40 hrs/week for work that in some times and places should rightfully have cost $60/hr...

This latest opportunity is very exciting and I just wanted to hear from fellow CP'ers about their experiences with hourly rate vs. project bid scenarios...

Thanks Everybody,

clientSurfer

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

Bid - if scope is clear, frozen and signed off**.
Hourly - otherwise.

How about agile - hourly? Wouldn't that be a better option?

** Highly unlikely; there will be changes in scope.

modified 9-Nov-15 23:04pm.

Yeah I've only had one meeting with this guy so the scope is not clear at all...

I like the idea of agile hourly... I'm going to investigate that further... Thanks so much for the reply! Cheers

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

This is always a nightmare - and the "best" route is never as easy to spot as it seems. Basically, there are a number of major factors which determine whether I quote an hourly rate or a fixed price:
1) Specification. How "tight" is it? The "firmer" the spec, the more likely I will go fixed price, but with a caveat that changes may mean additional cost. The "looser" the spec, the more likely that I'll go hourly.
2) Ability to estimate my time. I'm reasonably good at this these days, but I've made some horrible errors in the past. If you are good at estimating how long something is going to take you, then most customers prefer a fixed price. If you aren't, then hourly is the only way to go.
3) Customer history. How good are they to work with? How easy is it to get the money out of them when it's due? Do they pay up in the thirty days from the invoice, or is it always ninety days in practice? The more hassle it is to get the money, the more an hourly rate is likely.
4) Repeat business. I'll give a fixed price or discounted if it's pretty sure that there will be more work as a result - I'm in this for the long term, and losing a little money now to get it back fourfold over the next five years is a good bargain! Or if I can get a commission on each item they sell as a result, then I'll leap at it! That's like having a free money machine pumping into your account for the cost of sending an invoice each month!

The one thing I will say about a fixed price: try to make it staged payments: maybe 25% upfront, 25% here, 25% there, 15% on delivery, and 10% on three month retention. That way, you are hopefully covered for your costs at each stage even if they decide to sit on the final two payments (i.e. "pure profit margin")

Bad command or file name. Bad, bad command! Sit! Stay! Staaaay...

This is usually how I approach projects. Customers do like a fixed price. However, they also understand that the project can go over due to unforeseen issues. So in those cases, most customers don't have a problem adjusting the original quote. I don't really like hourly because lawyers bill hourly and nobody like lawyers.

jesseseger wrote:
I don't really like hourly because lawyers bill hourly and nobody like lawyers.

Good stuff - thanks so much for answering!

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

Great answer and good food for thought... Thanks so much

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

A bid is not a final price. If the scope changes then you manage it with a change request. If a risk becomes an issue then you should have already identified the impact in terms of additional cost, time and quality. In summary, it's just a price on what you already know about the scope. You can't rely on the client's definition of the project,these are things you must analyse yourself and provide your input as a professional.

Excellent... This ties in with what some other CPians have been saying...

I really appreciate your feedback!

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

clientSurfer wrote:
1994 ... and got to learn the beginnings of .NET

Since the first beta of .NET 1.0 didn't appear until late 2000[^], that was a ridiculously long project! OMG | :OMG:

"These people looked deep within my soul and assigned me a number based on the order in which I joined."
- Homer

Richard Deeming wrote:
Since the first beta of .NET 1.0 didn't appear until late 2000[^], that was a ridiculously long project!

Thanks for catching that... I meant 2004! Laugh | :laugh:

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

OriginalGriff has great points.

Let me add:
- What does the customer want?
- Is your goal higher profits, or better software?
- Is it your default to deliver better software even if you have to go the extra mile for free?
- How good are you at estimating your time?
- New Technology?

I do more than half my work at an hourly rate. Because I am honest, I have a few open ended projects with clients where they send an email, I look into it, and bill them on the next invoice. That is nice for everyone. Hassle free.

But some clients prefer a "Bid not to exceed". Which is basically a way to get you to bid against yourself. Be careful.

I usually prefer hourly. But recently some bigger clients just have an easier time getting a big $ approved once. So I have been experimenting. Currently I am getting MUCH better at asking for 30-50% more than I think it would take in a worse case scenario. If the customer is happy with that, then I am happy. If I choose to throw in a few extras, it just makes me look better.

Awesome points to consider... You guys always come through... Thanks for replying!

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

clientSurfer wrote:
This latest opportunity is very exciting

Then obviously you should offer to do it for nothing as a pleasurable learning experience empowering you to better benefit your glorious nation and all mankind at a later date. That's the trouble with people today. All these entitlement issues. In my day you were lucky to get a plate of dripping a year and you were bloody grateful for it!

ROTFFLMAO

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

First time customers always want a Bid from me. I do about 5 quotes a month, and I'm pretty good at it now. So I use the Mechanics method, where I have a spreadsheet of past jobs with bid hours and actual hours that I keep updating. One of the secrets to staying profitable is to sell code already written as a job for predetermined hours and not give it away. So the new code you write that goes over the quoted hours is balanced by selling the code again for a predetermined amount of hours.

One method I've been using over the last 3 years is the Bid warning. I tell customers that I can Bid the job or match a competitor, but in the long run, the job won't be feature rich and it won't be bullet proof against your most problematic employee. So I give them two quotes, one to match and be competitive and one for a feature rich project that is dummy proof.

After a couple of projects for the customer, they always end up asking for quote 2, because it less of a headache for them.

So for code projects, we do flat fee. For HTML and artwork, we do it by the hour. HTML and artwork has proven to be impossible to quote because the customer always changes their mind. And on that note, during the development of a project, change orders are not allowed until the written scope of the project is complete and they have paid their invoice. Then they can purchase change orders.

I use to be a data contractor, and we allowed change orders during the build, but that was easy to figure out. With programming, the job will never end if you allow them, and it gets harder to get paid.

[Edit]
As for OriginalGriff's 30%-40% extra as a safe buffer margin, I use 20% to 30%, but not that often, and just for uncharted waters, new technology.

And no I don't feel like I'm ripping off the customer. To me reselling already written code is no different than McDonalds selling the same copy of a burger over and over.

modified 10-Nov-15 13:53pm.

Excellent well-thought answer... I see I have a lot to think about and you guys as usual have given me good food for thought. I really appreciate it!

Cheers!

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

I've been doing then for awhile, if you need help with your quote or want a double check, feel free to send it over.

Thanks so much jkirkerx, that's very cool... I will indeed take you up on that; I've already signed an NDA but I think I can make it generic enough for a double-check without violating it.

Thanks jkirkerx!

clientSurfer

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

Check out their annual report and base your rate / bid upon that.

The smaller the outfit, the more you can or will have to barter.

There should be some sort of "plan"; with a go / no go decision at each milestone and a revised estimate / budget. Have clear deliverables. You wouldn't hire a building contractor and tell them to just "build me something to live in".

Charge based on the hat you will have to wear during a particular "phase".

Gerry Schmitz wrote:
There should be some sort of "plan"; with a go / no go decision at each milestone and a revised estimate / budget. Have clear deliverables. You wouldn't hire a building contractor and tell them to just "build me something to live in".

Definitely - I'm working on that as we speak...

Thanks so much for replying

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

"The NSA wants to ensure young students are getting science, technology, engineering and math skills; at a camp in California this summer, one of dozens of camps across the country, girls from low-income communities “went home with little Raspberry Pis, a $65 computer that actually works,” Reinsfelder said. They also learned how to hack drones."

Washington Post: today: "The NSA school: How the intelligence community gets smarter, secretly:" [^]

«I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center» Kurt Vonnegut.

... having only that moment finished a vigorous game of Wiff-Waff and eaten a tartiflet. - Henry Minute
I'm still looking (eagerly) for wisdom in terms of best practices in OO design; and I doubt I'll ever quit looking. - BillWoodruff
Programming is a race between programmers trying to build bigger and better idiot proof programs, and the universe trying to build bigger and better idiots, so far... the universe is winning. - gavindon

I've been curious about Win 10, so I think I'm going to install it on my laptop.

Then I can evaluate it without mucking up my Dev PC, and if all goes well, I can use my laptop as a Win 10 test area.

Any reason not to upgrade?

If you are moving from 8.1 to 10, then none.
From 7 to 10 can be a PITA...and 10 is still an ugly OS in comparison. There are some posts of mine in this forum earlier this year which describe the hassles I had.

Bad command or file name. Bad, bad command! Sit! Stay! Staaaay...

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