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Startup proposal from Software Engineers

I have been talking to a team of 4 from India about developing a startup. We have initial startup money of $40K. Today they sent a proposal on how long it would take them to build the application. They believe that it will take them 84 Days to build the application with a team of 4 at $25 an hour each ($67,000 in total).

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I want to know some bargaining ways to potentially talk them down on their initial proposal. Whether that it is their price per hour, days spent on certain features, etc.

Anyone that has had previous experience with working out the cost for the developers would be great for this question. If worst comes to worst we can take out an additional loan to cover the rest of the costs, but I would prefer not to.

Answer 7351

There are few way to negotiate the price.

1- understand what they are re-using and what needs to be implemented opportunistically for your application. I.e. social login is usually a pretty common component of every app.

2- break down the most time consuming tasks. This gives you visibility on what is the most impacting subtask. Usually is also harder for the service provider to justified prices/time when it comes to really simple tasks.

3- having a fixed price, no metter what task they are doing, is unreasonable. A server side engineer shouldn’t earn the same as a UX researcher. Ask them to give for each task the cost/h based on the skill of the person involved.

4- the usability evaluation listed that late in the project make me doubt about the quality and the impact of the task. Beside this, you should be the one validating the usability throughout the entire process.

5- final delivery sounds a bit suspicious, again ask to break down into smaller tasks.

Now, besides all those points, you need to understand they are a business, so their offer is based also on the market offer. Having different competitors’ offers allow you to negotiate better. Back in time, it was a common practice to take offer A, lower by 20%, go to vendor B, ask for a quote after showing the adjusted offer from vendor A, get a new offer from vendor B (that usually is around 22-25% less than the real vendor A’s initial offer) and then go back to vendor A. Please note I will not discuss the ethical side of such behavior.

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