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I was just wondering, could one have a contract like this (I haven't done freelancer work yet, but might look in future): "Up to 3 months of development time, I

I was just wondering, could one have a contract like this (I haven't done freelancer work yet, but might look in future): "Up to 3 months of development time, I will take a fixed rate. If the development goes beyond that, I will charge hourly."?

ghh 13y ago
If the other party agrees to it, any contract is possible. However, in this case you get more money if somehow the project is delayed over the three month period; so you have an incentive to work slowly or to have the project creep up in scope. That's not a good basis for a contract for your client may complain that you should've worked faster, even if you've put in all-nighters. Given a fixed price, it's easier on the relationship to have the fixed price be renegotiated on basis of objective measurements that you used to arrive at the fixed price in the first place. Examples are the number of pages in a site or screens in an app, the number of revisions of the visual design, or the number of function points [1] if you have data available for that. Mention in the contract that if a client wants more than X screens, Y pages, or Z revisions, the fixed price is to be recalculated. [1] http://en.wikipedia.org/wiki/Function_point http://en.wikipedia.org/wiki/Function_point
trcollinson 13y ago
I haven't done a contract quite like what you describe, but as has been pointed out, if both parties agree, anything in possible. I have found more success in a "retainer" model of consulting. We agree on a certain number of hours needed up front, say three months. If they pay a retainer up front, they get a 5%, 10%, or 15% discount (dependent on negotiations). They then burn time against these "retainer hours". At the end of their retainer you can slip into a normal hourly rate billing cycle or negotiate for another retainer at a discount. The client knows more fees are coming as the retainer approaches zero, and thus will very often not allow scope creep to come in. I often try to keep a little retainer left over at the end. Some say I should keep this for "change" orders. However, I will give it back to the client! Why? 9 out of 10 times when I offer to return the leftover they are ready to add it to a new retainer for another project. You can't make a client happier than saying "here's the final demo of your project! It was great right? Oh by the way we came in under budget." Just make sure you are in constant communication with the client, have regular demos, and deliver something amazing.
- bigtunacan 13y ago
  I haven't used a retainer model in the past, but I have offered term of contract discounts. Some people tend to think that a contractor that bills hourly is just going to try and waste time to make more money. I have only seen this with one contractor that I came in contact with (I'm sure there are others), but most contractors will not do this. People talk about people; within your network you quickly learn who is reliable, who is honest, who isn't, etc... Also when I bid work for a client; while I bid hourly I am open about the reasons. I tell them point blank how many hours I believe their requirements will take to implement in a worst case scenario given they do not change the requirements. I then tell them that likely it will take less hours than that, but they need to know how much the total cost could potentially be. If the customer is still insistent on a fixed rate contract I explain that it can be difficult to prevent scope creep for customers when there is no dollar amount tied to it; and that I want everyone to be happy. I explain that if they really want a fixed bid I can make an exception, but that the fixed rate pricing will be double to triple what we have agreed upon as the max cost associated with the project. I explain this is to cover the scope creep that will inevitably be introduced and to protect myself from the loss risks associated with such a decision. Most clients then agree to the hourly rate; the rest keep looking for someone else.

ghh 13y ago

If the other party agrees to it, any contract is possible. However, in this case you get more money if somehow the project is delayed over the three month period; so you have an incentive to work slowly or to have the project creep up in scope. That's not a good basis for a contract for your client may complain that you should've worked faster, even if you've put in all-nighters. Given a fixed price, it's easier on the relationship to have the fixed price be renegotiated on basis of objective measurements that you used to arrive at the fixed price in the first place. Examples are the number of pages in a site or screens in an app, the number of revisions of the visual design, or the number of function points [1] if you have data available for that. Mention in the contract that if a client wants more than X screens, Y pages, or Z revisions, the fixed price is to be recalculated. [1] http://en.wikipedia.org/wiki/Function_point http://en.wikipedia.org/wiki/Function_point

trcollinson 13y ago

I haven't done a contract quite like what you describe, but as has been pointed out, if both parties agree, anything in possible. I have found more success in a "retainer" model of consulting. We agree on a certain number of hours needed up front, say three months. If they pay a retainer up front, they get a 5%, 10%, or 15% discount (dependent on negotiations). They then burn time against these "retainer hours". At the end of their retainer you can slip into a normal hourly rate billing cycle or negotiate for another retainer at a discount. The client knows more fees are coming as the retainer approaches zero, and thus will very often not allow scope creep to come in. I often try to keep a little retainer left over at the end. Some say I should keep this for "change" orders. However, I will give it back to the client! Why? 9 out of 10 times when I offer to return the leftover they are ready to add it to a new retainer for another project. You can't make a client happier than saying "here's the final demo of your project! It was great right? Oh by the way we came in under budget." Just make sure you are in constant communication with the client, have regular demos, and deliver something amazing.

bigtunacan 13y ago
I haven't used a retainer model in the past, but I have offered term of contract discounts. Some people tend to think that a contractor that bills hourly is just going to try and waste time to make more money. I have only seen this with one contractor that I came in contact with (I'm sure there are others), but most contractors will not do this. People talk about people; within your network you quickly learn who is reliable, who is honest, who isn't, etc... Also when I bid work for a client; while I bid hourly I am open about the reasons. I tell them point blank how many hours I believe their requirements will take to implement in a worst case scenario given they do not change the requirements. I then tell them that likely it will take less hours than that, but they need to know how much the total cost could potentially be. If the customer is still insistent on a fixed rate contract I explain that it can be difficult to prevent scope creep for customers when there is no dollar amount tied to it; and that I want everyone to be happy. I explain that if they really want a fixed bid I can make an exception, but that the fixed rate pricing will be double to triple what we have agreed upon as the max cost associated with the project. I explain this is to cover the scope creep that will inevitably be introduced and to protect myself from the loss risks associated with such a decision. Most clients then agree to the hourly rate; the rest keep looking for someone else.