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Value-based pricing in software development is a high-risk gamble though, as it can very easily go either way. The risk of course decreases with experience, but
by MortenK 14y ago
Value-based pricing in software development is a high-risk gamble though, as it can very easily go either way. The risk of course decreases with experience, but even experienced teams and individuals can burn themselves on value-based, i.e. fixed-price. If the seller overshoots their estimates, you have a regular tug-of-war, where the seller is trying their best to do as little work as possible, because every extra hour puts them further in the hole.
- nthj 14y agoI find I like working on existing projects for this very reason. You can scope things into weekly blocks and emphasize the value you're adding to their business. It's easier for the customer to "See" it since it's not vaporware. It's also much easier to get a 1-week estimate right than a 3-month estimate. And even if you really really screw up, all you've lost is a Saturday. When you screw up a 3-month estimate it's more likely to cost you six weeks' billables. Even if you charge hourly, do you think the client is going to give a stellar reference for the contractor that billed $20K+ over his estimate? Short scope, well-defined, less risk, more fun, easier sell for both parties. So I'm with you. I would not want to jump into a 3-month fix priced contract blind.