Pricing of programming work

The pricing of programming work is a very delicate subject. There are different methods, but we will discuss in this post the two most popular, which are fixed billing based on specifications and billing based on hours worked. These methods are completely different from each other, but it is impossible to say unequivocally which one should be chosen. It all depends on the project and the client.

Fixed price

Fixed pricing of the project prepared on the basis of e.g. specifications or mock-ups. Clients usually insist on this form of payment. From their point of view, it is best, they get a price quote and they know how much they have to spend on the project. Unfortunately, with this form of cooperation, it is very easy to have some problems.

To begin with, hardly any project has a precisely prepared specification. It's not even that the company is not able to prepare it, but often customers themselves don't fully know how everything should look and work. Even if we have a specification, during the creation of the application when it is already "touchable" the vision of the programme often changes. In this situation, a problem often arises, as the customer thinks that we should change something in the initial quote and we think that the customer should pay extra for this change.

Fixed pricing for programming works well for less complex projects that are well described and will not change over the course of the work, or for projects that are very carefully outlined and the initial assumptions will not change.

Time & Material

The complete opposite is the Time & Material method or payment for hours worked and materials used. In short, it means that the contractor records how much time individual employees spent on specific functions of the application. On the basis of such a timesheet (i.e. a list of hours for each employee), the contractor issues an invoice based on the hourly rate previously agreed with the client. This solution is much better because it allows you to create a product exactly in accordance with the client's wishes.

In this type of solution, clients are most afraid that they do not know exactly how much they will pay for the project. Of course, it may happen that the software house will try to exploit the client's unawareness, but it is possible to be protected against this.

Firstly, we can determine the maximum amount we are able to spend. On the basis of this information, the contractor will prepare a schedule of works that will fit within this amount.

Another precaution is to prepare a standard quote. Although billing will be based on hours worked, such a quote will give the client an idea of roughly what it will cost him or her.

Such a price estimate doesn't even have to be exact, it's about showing a range for each module/function. This also allows the client to assess what is more important and must be done or can wait.

In Code Apps, when it comes to web applications, we always offer our clients Time & Material price estimation. Dozens of completed projects convince us that this is the best model of settlement.