Subject: Re: How much should I charge for fixed-price software contract?
From: (Rob Warnock)
Date: Tue, 12 Jul 2005 00:19:27 -0500
Newsgroups: comp.lang.lisp
Message-ID: <>
Bulent Murtezaoglu  <> wrote:
| >>>>> "TX" == Tim X <Tim> writes:
| [sane advice deleted]
| [...]
|     TX> 4. Calculate your hourly rate by dividing your year_hours into
|     TX> your targeted income for the year. Then multiple that rate by
|     TX> the number of hours it will take to do the job and you have a
|     TX> figure you should charge. Simple.
| Simple only in a world where the market will bear the price that you
| compute.  What you say is best seen as an inequality that needs to be
| satisfied if the reality is to match one's financial plans (+ gravy).
| Reasonable customers in a fairly stable market usually have target
| prices within +/- %25 or so of what the 'going rate' is for a
| particular kind of work anyway.  If you don't have an preexisting
| happy relationship or have word-of-mouth 'super guy' credentials,
| anything much higher gets a "thank you for your time," ...

But the "Subject:" here is FIXED-PRICE contracts [a.k.a. piece-work].
If one considers themselves to be especially good, one can price the
job at what an *average* Joe would take to do it (with average tools,
if we're using Lisp), which will be some huge number, even apply a small
discount to that and be quite "competitive", but then rake in a very
high actual hourly rate if in fact it takes you a *lot* less time to
finish the task than Joe Average.

The downside of fixed-price work is that if one badly mis-estimates
the time required to complete task, one can get very badly soaked,
since it has to be finished anyway [as one watches the effective
hourly rate asymptote hyperbolically towards zero].

Still, I have personally found that small-to-medium [$10-20K] fixed-price
contracts can be a good way to get one's foot in the door at a large
company, especially if the task is one that is in some sense "optional"
for the client [e.g., an improvement to their network automation, say].
The contractor assumes almost all the risk [which makes the client happy!],
and gets a large reward if he/she is a good estimator.


Rob Warnock			<>
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