Fixed price for your software project?

Do you offer a fixed price for application development services?

We usually give a rough estimate for each sprint. To give a fixed price estimate, requirements need to be defined in great detail and the requirements need to stay fixed too. From my experience, this is never practical. So we can’t give fixed prices for whole projects as such.

Rough estimates require less administration and gives you more flexibility as a client. If one of our clients would be dissatisfied about a certain feature or service, we are happy to give a discount as a gesture of goodwill, and instead focus on how we can avoid any dissatisfaction in the future.

We understand that a fixed price for each request might sound ideal as a client. We just give rough estimates though, for the following reasons:

  • Requirements often change during development. This is natural, as all parties spend time thinking about how we will use the system.
  • Fixed price jobs are often an administrative burden: time needs to be spent by project leaders to clarify whether or not a request is part of an earlier fixed price requirement or not. It is more constructive to focus efforts on delivering true value.
  • A fixed estimate may end up being costlier because we need to spend time specifying exactly what to do and not to do to minimize risk.
  • Development may take longer time as change requests need new estimates which need approval from you. Temporarily moving a developer off a project while waiting for the approval requires more administration.
  • Each software project is unique and an unknown number of research hours may be needed to clarify what exactly needs to be done.
  • We already bill all our clients hourly, and we find it too high risk to take on a fixed price project for a new company.

But how can we control the budget on a non-fixed price project?

  • Read about what LiteBreeze does to make your project a success.
  • We can provide estimates for one sprint at a time as per the agile development methodology and if you feel that not enough value for money has been provided, contact us to discuss. If we have failed to deliver within a reasonable number of hours, we can discount hours. We’re committed to a long-term relationship which is mutually beneficial.
  • We suggest that both of us re-prioritize features frequently to make sure time is put into only the top priority tasks that gives the most value per hour spent. Focus on High Impact Low Effort (HILE) tasks.
  • Evaluate the reported progress and send us feedback on how well you feel the developers are doing.
  • We keep developers’ performance high through frequent coaching.
  • We have a transparent system and our aim is to make it easy for you to evaluate. You can at any time check how each hour is spent through our client portal and the daily/weekly billing notification emails.

When I personally contract third party consultants and experts, I don’t insist on a fixed price for these reasons, except for perhaps an initial project study.

Long term project success is more about recruiting the right software development team and coaching your software developers through feedback, rather than pushing for fixed price deliveries.