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Many important aspects about estimation, hourly rates and breaking such a project down into smaller, more manageable parts have already been brought up in this
by BjoernKW 8y ago
Many important aspects about estimation, hourly rates and breaking such a project down into smaller, more manageable parts have already been brought up in this thread, which is why I'd like to offer a different angle on this, i.e. value-based pricing:
What would this 'simple' CRUD app be worth to your client? Is it possible to quantify the value this app will generate per year, e.g. by the client's own projections?
Is it a new app or will it replace an existing one? If the former: What are the revenue projections? If the latter: How does the client expect this new application to improve upon the existing one?
In both cases: What are the alternatives? Could the client use WordPress or an off-the-shelf backend-as-a-service product to achieve the same outcome - albeit at a perhaps lower quality, with less customised behaviour and maybe even at a higher price?
Asking these questions will allow you to get a much clearer picture about the project than you'd be able to do by merely estimating your own cost.
Value-based pricing doesn't mean that you charge your client the value the finished product prospectively will generate, though. It's really about changing the premise from development work being a cost centre to something that adds value to an organisation.
This can make a huge difference in both perspective and perception.
Let's say by asking your client these questions you both come to the conclusion that the product will generate $100,000 for the client over the next 3 years and buying and maintaining an off-the-shelf alternative will cost $50,000 during that period. You'd then be able to quote - for instance - $30,000 and create significant value for the client, both in terms of the potential revenue these $30,000 afford the client and the costs saved compared to a competing solution.
This approach might not be as straightforward and more difficult to achieve than the hourly billing one but it's more honest and allows for more sustainable business for all parties involved.
Remember, what the client actually wants (or should want) is not your time but the product you'll be able to create. Framing this product in terms of time spent rather than value created gives rise to all the wrong incentives.
- jacobyoder 8y ago> Framing this product in terms of time spent rather than value created gives rise to all the wrong incentives Mostly agreed, however, when you leave the determination of the value created in someone else's hands, other wrong incentives come up. And... the value is often reliant on execution of other areas of business outside your control (support, marketing, pricing, etc). I can do the same project for 2 companies - one will struggle to get any value from it, another will get millions.
- BjoernKW 8y agoI get your point. However, is a client who tries to play down the value you create for them really the right client? If what I can contribute has so little value to the client why would they need my services in the first place? As for vastly different execution on the client's part: Yes, that's why it's a value projection and not a revenue or profit share model.