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Currently i'm working on a Purchased Order System Application Project for a small scale company.

The Software that i am working on is personalized based on the on their business requirement.

The company told me to create proposal include the price how much is the application is so they can process the check for me.

The person who give me this project is the company supervisor and also a former supply chain supervisor in my employer before which i work also in some of their applications back then.So i want to be fair.

This is my first time to create an application as a sideline so i really never experienced pricing a software even though i am working as full time web developer in a big company.

Any tips and help ?

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3 Answers

up vote 5 down vote accepted

The company told me to create proposal include the price how much is the application is so they can process the check for me.

It really depends on how did you negotiate the price. If it is a fixed price, then you need to split your software into logical modules and sub-modules, and price them individually.

However, you also need to include condition of "Change request" - to indicate what would be your charge for that.

Roughly speaking, your estimation accuracy is important to determine what effort it will take you to build this application. I would do the following to find the Total:

  • multiply your hours by average rate,
  • add profit 15-30% to overall price
  • added expenses like operation, hosting charges if applicable,
  • add taxes. That would be your final total price.

Of course, you may negotiate taking base the estimated price and may also lower your price up to 10%.

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+1 for mentioning change requests! –  FrustratedWithFormsDesigner Oct 4 '12 at 1:49
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I'd go by how much time I invested into it: hours * n where n is the dollar figure that I believe my time is worth.

If you have no idea how much time you invested into it, try digging around for comparable products to see how much they charge.

The person who give me this project is the company supervisor and also a former supply chain > supervisor in my employer before which i work also in some of their applications back then.

This shouldn't matter. Business is business.

So i want to be fair.

You should strive to be fair to all clients, not just those you have a past with.

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Quote high, you can always negotiate down easily. Negotiating up is much harder. –  World Engineer Oct 4 '12 at 0:59
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"digging around for comparable products to see how much they charge." How to do this? –  Louis Rhys Oct 4 '12 at 3:43
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You can use the other suggestions - Cost+ Pricing - work out what it cost you, add some profit and charge that. It's valid and widely used in competitive markets, and will put food on your table, but nothing more.

Software is rarely competitive, so you use Value Add pricing - what value is the software to your customer - if he's an iFanBoy, you can often sell a useless app that does nothing for $10.00. If its a multi billion dollar multinational and your app saves them 0.1% of annual revenues you can charge 0.1% of multi billion dollars, no matter how much it cost you to develop. In your case, if your app makes/saves your customer $X/annum, charge him between $X and $3X (hint - < 1 year comes out of OP-EX (certain sale), 2 years needs budget (hard sale), and 3 years needs financial departments approval (practically impossible sale) )

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