Subj : Re: How much should I charge for fixed-price software contract?
To   : comp.programming,comp.lang.java.programmer,comp.lang.lisp
From : Tim X
Date : Sat Jul 09 2005 08:28 pm


Nobody nowhere on the planet is going to pay for software based on the
number of bytes in the source files! Software is not like potatos, you
don't get more money for providing more. Besides, most of the time,
the better you understand the problem domain and the higher your skill
and experience, the more you achieve with less. 

If you are going to write software for a fixed price contract, the
only way to determine the right price is to have an accurate idea of
how long it will take you to do the work. The only way you can know
this is through a combination of knowledge/understanding regarding the
problem area and an accurate and honest estimate of your level of
productivity. It is also very important to have a clear and agreed
scope which not only includes specific deliverables, but also what is
not to be delivered and what the costs would be for changing the
scope. 

To work out how much to charge for some software you write, you need
to know -

1. How many hours it will take you to complete the job. A useful trick
   is to make your estimate and then multiply it by pi. 
   This often gives a more accurate figure once unexpected factors
   come into play. 

2. Determine how much you want to earn a year

3. Work out how many hours you can work a year. A useful formula is

   (52 - holidays) * workdays_in_week * hours_in_workday = year_hours

    Note that this is meant to be hours you can charge for, so you
    cannot have 7 wordays in a week because there are lots of things
    you need to do which you cannot charge for (chase down work,
    marketing, taxes, general office admin etc). I've found that if
    you are doing long term type contracts, you can generally work 3
    days out of every 7, but if your doing short term contracts, you
    need to do more admin and therefore can only work 2 days per
    week. Its also important to put a real number on the hours you are
    prepared to work in a day - don't put 16, put 8 or maybe 9. Note
    that I'm assuming a 5 day working week with two day weekends.

4. Calculate your hourly rate by dividing your year_hours into your
   targeted income for the year. Then multiple that rate by the number
   of hours it will take to do the job and you have a figure you
   should charge. Simple.


-- 
Tim Cross
The e-mail address on this message is FALSE (obviously!). My real e-mail is
to a company in Australia called rapttech and my login is tcross - if you 
really need to send mail, you should be able to work it out!

.