The Myth Of The Fixed Price Software Project

Ah, the fixed price software project. Sounds great in theory... but in practice? Someone’s probably going to end up either in a fit of rage, tears, or both - whether it’s you or your developer (and possibly both of you…).

Unless it’s a tiny change to software, fixed price projects are best avoided if you want a professional experience.

What are the problems with a fixed price software project?

The developer probably doesn’t know what they’re getting themselves into

If a developer has given you a fixed price for a project, it’s probably because they’re inexperienced - they’ve only ever worked for a company where they haven’t needed to do contract negotiations before, or have very limited experience in the area.

What this means is one of you is going to get up getting the rough end of the deal.

There are a few different ways the fixed price project can go:

●The developer will honour the price contract, do a good job, but take much longer than expected

●The developer will honour the price contract, but do a rubbish job

●The developer will ask for more money because it’s taking them way more time than expected

●The developer won’t finish the project, but will offer you some form of refund (depending on your agreement)

●And then we come to the least likely; the developer will finish on time, to specifications, and do a good job

Why can’t you set a fixed price for a software project?

If you want to set a hard limit for a budget for a software project, be prepared to wind up with an incomplete product. Developers earn their living from the time and effort they put into a project. If they have put in as much time and effort as they are worth and the project isn’t finished, then who’s fault is that?

It’s either your fault, for not picking a more experienced developer, or changing too many requirements along the way; or their fault, because they overestimated their abilities, or underestimated timelines.

Either way, it doesn’t help you.

It’s better to hire an experienced developer (or development team) with an hourly rate or on a retainer, and get them to give you a rough estimate of the costs involved and the time it will take.

How can you get a more accurate cost estimate for a project?

Know exactly what you want

Nailing down software project requirements before embarking on development is essential to ensure the project doesn’t go on forever. When utilizing an Agile software development process, it makes it easier to make changes or additions along the way, but by having a very clear idea written out beforehand, including things like screen mockup drawings if necessary, it’ll be far easier to estimate a cost.

If you don’t know exactly what you want yet, you can either ask for advice from your future users, or keep brainstorming yourself. Software houses are there to bring to life your creation once the idea is fleshed out and well defined enough.

Get a few quotes

By getting a few quotes, you will start to get an idea for how organised and detailed a software house is. Be very wary of developers that come back with a short outline along with their quote. Check that there’s a detailed analysis of your project and scope in your quote - don’t just accept something because the estimated price looks great.

Outsource to a reputable, experienced software development team

The more experience that a software development house has, the more projects they’ve completed, the more customers they’ve helped, then the better equipped they are to have a fairly good estimation skills of how long something might take to build, what’s involved, and the human resources required. This means they’ll be able to give you a more accurate prediction of costs, including breakdown by component.

But someone’s offering me a fixed price project agreement and it sounds great?!

Most things that sound too good to be true usually are. You know those people that offer “full website design for only $2500!”? You find yourself with a cookie cutter website that looks like all their other clients’ websites.

Your software project is unique, and will have unforeseen changes arise along the way, this is inevitable in software. Honour the value of your idea itself and its final quality by resisting the fixed price project.

Get a quote on your software project with CodeFirst

This all being said, if think you’re ready to get stuck into development on your project and want to gather quotes, then start with us! We have experience across a broad range of industries, projects, technologies, and regions - and are ready to help get your project off the ground. We can provide a detailed quote on your project and/or discuss options for hiring developers.