tech-company, project-managementAs a tech startup I always have this issue that how to evaluate cost of any project before taking it, We are developers just jumped off in business and also tried some freelancer projects but this issue always tackled in mind that is the paid price was really promising and worth? according to our hard work, So is there any techniques or evaluation patterns which i can follow? Particularly i am talking about IT startup, Any suggestion will b really helpful.
It really depends on how you’re selling…
For estimates done on a cost-plus basis, there isn’t much beyond the hunch you build by gaining experience (an anecdote or two of which you’ll see narrated in Peopleware). It’s subjective and depends on the dev, too. Some analyze and code really fast, others miss a thing here and there and end up re-engineering what they just wrote on a semi-constant basis.
For those done on a market-cost basis there’s even less you can do. It’s the same with the added twist that you’re a commodity and can’t really set your prices - i.e. either suck it in or leave it. (That’s how it often is when you’re based in developing countries.)
If you’re selling on value however, you can do damage control by selling for more while reducing the perceived risk. Specifically, learn a thing or three about sales and basically learn to qualify your leads. Besides checking the purchase process and the timeline, qualifying leads involves pushing your prospects to throw up on the table. You want them to expand in great details on how painful their situation is. And you also want to verify that they’ve an appropriate budget to fix it. As you do, try to surface what they stand to win if they got for it and succeed - and/or lose if they do not, if appropriate. Then proceed to sketch things out, do your best to work on the perceived risk, and try to anchor your price not against your costs but against their upside. Keep their eye on their ROI.
Aside in passing: more often than not you’ll want to sell on time spent for software dev work. You can and should provide an estimate of course, but you should put it forward like e.g.: “Note that we invoice on a Time and Materials basis. Our estimates are mostly accurate more often than not, but not always owing to unexpected complications. If we’re wrong and take less time it’ll be cheaper, but it works the same the other way. We’ll raise it the moment we notice if that arises of course.”
Other aside: larger units like a half-day, day, or even week work better than hourly. Because the longer increments help avoid chit chats that amount to micromanagement (“why are you invoicing me for 15’ spent on emailing me?”).
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