software, business-model, web-development, pricing, hoursI’m aware it mostly depends on supply/demand. That being said, I’m more interested in how to calculate a base hourly rate that you, as a software company, can charge.
If I remember correctly, an in older post an user claimed their outsourced charged about $25/hour per developer assigned to the project. But the way I see it, you would instead have a fixed rate per hour with a team with a fixed developer count. (Unless I’m missing something).
There are several pricing strategies to take into consideration.
It all starts with choosing whether you want to be; a. cheapest (low) b. best-at-price (middle) c. expensive (high-end)
Obviously each of these three categories have certain service levels associated with them, which in order for your business to be successful you should try to meet or possibly exceed.
A pricing strategy, that positions you in the cheaper end is to identify your company costs of operations (including salaries). Divide this cost into hours worked and add a margin of 10% or what you see fit to stay a cheap solution and still survive.
If you want to be “best-at-price” you’d do the same exercise as in the cheaper pricing strategy, but you should add a mark-up that places you in the mid-range agencies, and apart from that you can even deduct the QA time from your hours worked and divide with your new calculation. This will give you an idea of the price range you need to be within.
A “expensive” price range can be achieved only through delivery of high quality and proof of concept. Make sure your margins justify that any worker might need to work overtime 3-4 days in a row to meet critical deadlines etc, and make sure you have the right competencies in your staff to meet these customer demands.
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