How To Bid A Development Project?

Question

I have landed a side project where a company wants me to develop a database / smart client to track participants in their various programs. This app will be written in C# and MS SQL Server.

I was wondering if there are any tips on how to actually bid out a price for the job?

1. Should I charge a flat rate (if so how do you charge it?)
2. Should I charge by the hour (if so what is a going rate?)
3. Should I enter into some sort of contract?

Any comments or tips would be very helpful, as I am completely new to doing "side gigs" outside of my normal programming job.

Thanks in advance

Answer 1

Yes you should enter into a contract, you need to spell out the terms and conditions of the work the expected deliverables and payment. You will also want to indicate who owns the source code.

I prefer Time & Material contracts, that is they pay an hourly rate. This allows them to change the scope without having to renegotiate the terms. If you go with a fixed bid project then as the users starts to learn what they want and change the specification, which they will, you will have to make a choice. Either you do it for free or you negotiate a scope change.

Answer 2

Your goal is to get the gig, and once you have it, make enough money for it to be worth your while, right? With that in mind, you can do flat rate if the client demands it, but otherwise try and get it hourly, because there will always be snags, and the client will always throw changes at you from the first day to the last minute that will suck down your time if you let it. Either way, get a contract that specifies what you are going to deliver and how to handle change requests.

I did a succession of fixed price contracts for a client once, and it worked great. Then they said they were having a little problem getting a signature on this contract from head-office, but if I were to just do the work they'd make sure I got paid for the work eventually. So I spent two months working on it, only to be told that they had been turned down by head office and so I wasn't going to get paid. I'm 90% sure they'd made a copy of my work before I could delete it from their servers, but nothing I could prove in court. So I'll never work without a signed contract again. If they don't sign a contract on day one, get the hell out of there.

Answer 3

If you're a beginner I'd advise against a flat rate ... unless you are prepared to shoulder the risk of more work than is paid for. It is inherently hard to estimate the effort a project takes.

The rate you can take depends on your market and how you value your time. It might be interesting accepting a low rate gig to get started in a certain market when you have free times at your hand or if you're just interested at the subject.

Answer 4

Well there are a few things you need to worry about.

Contract, yes, this is 100% needed, otherwise you might not get paid. The details of the contract are what might by challenging, especially about how to charge, which is what you're asking.

If you charge an hourly rate, you have to worry about being fair when you charge, and I'm sure the client will worry about this. If you're on the clock, it's not fair to check your email, YouTube, or even Stack Overflow (gasp!). Then there is also the question about whether you should charge if you need to learn some new skill. For example, if you have to learn library A, is this charged to the client or should it be done on your own time?

With a flat rate, you have to worry about keeping yourself productive so that you don't end up with a lower hourly rate. On the other hand, if the job turns out to be easy, you can finish quickly, and end up with a good hourly rate. This probably would be a lot more fair to both parties since no one would be monitoring you so that you're not goofing off and you wouldn't be doing something unethical if you decided to surf the internet while you're working.

If this is a side project and not a long-term job, I'd highly recommend a flat rate. Make sure you estimate it properly though. Take a guess of how many hours you think it will take you, add 20%, and then multiply this by some reasonable hourly rate. The other party will most likely be much more open to a flat rate since then it will be like they are paying for a finished product, rather than a developer.

Good luck!

Answer 5

Bidding is a tight rope walking game. Neither too low nor too much. The contract or the hourly rate always drives bidders mad. Be just in your bidding price and do not undercut too much else you might end up working for nothing. Also bid in such sites that hold the project price in escrow once the winning bidder is chosen. One good resource can be found at :- http://www.freelancing-on-net.com/writing_a_successful.php#

Answer 6

Even if you are bidding hourly, customers always want at least an estimate. Don't forget to account for all the activities that you don't think of when you're thinking of creating software.

Specifically, think of project management, meeting and call times with the client, end user meetings, source code management, testing, and bug fixing. In short, everything that you do for this client that prevents you from making money with another client needs to be billed to this client. You can account for that with the number of hours bid or with the hourly rate (usually a combination of the two).

I used to hear, "Prepare your best estimate. Then double it." Then I heard, "Prepare your best estimate, then times it by Pi." Now I hear, "Prepare your best estimate, then times it by Pi, then double it." :)

Unfortunately, the only way you'll get good at accurately bidding projects is to bid some, complete the project, and see where you were over or under.

You're always motivated to bid low to ensure that you get the project. But if you lose money doing a project for half your cost, getting the project might not have been a good thing.