So you finally landed on a project, took care of all paper work and ready to roll.
For estimating a project, the vital part is, you understand requirements in details and have a contract signed with the client. Read my blog, Got a software project? Beware, if you’ve missed it.
There are two common ways to calculate a project cost – hourly rate and fixed cost. I cost a project based on number of total hrs spend on the project multiply by my hourly rate.
Total Cost = (Number of hrs work) x (Hourly Rate)
For example, if a project will take me 40 hrs to do and my rate is $100/hr, the cost of the project is $4000. I use same formula if a client wants hourly or fixed cost.
Here number of hrs include understanding the requirements, creating a design document, coding, testing, creating a production deocument and time spent on communication such as emails, phone, and messangers.
Now, sometimes you are sitting idle and have no work and you need some work. In that case, you may reduce the hourly rate.
OK, so you and the client, both have agreed on a final cost and time. Now, next part of the deal is payment.
If a project is large and takes you weeks to give the estimante, it is not a bad idea to ask the client to pay you for a week in advance. This payment maybe included in the total cost once project is assigned to you.
Do not wait to get paid until the project is fully done. Learn from my mistakes. I had worked for a client for 8 hrs and finished 100% project and delivered on time and client told me, he doesn’t want the project anymore. Even though, I had a contract signed, it’s just difficult to get into legal procedures, specially, when it’s a small project. Now, I wasn’t going to contact a lawyer for 8 hrs of work.
The best way to work out the payments is, partial payment plan. You may break down payment into 3 or 4 partial payments.
- 20% before project starts
- 20% when project is half done
- 30% when project is 100% done and delivered
- 30% when the client has accepted and is fully satisfied with the project
If you apply this procedure, you and the client, both would live happy ever after.