[thelist] Fixed Cost Estimations

[Bob Meetin]

> On 21/07/2011 13:15, Fred Jones wrote:
>> In response to the recent thread about T&M vs Fixed Fee, I have a question.
>>
>> First I will note that I never had a Materials cost, just a Time
>> one--all I do is make web sites. :)
>>
>> Anyhow, I think everyone knows about the "Cone of Uncertainty" which
>> means that my estimate today, before the job begins, is up to 4x off.
>> Therefore it would appear to me that if I do fixed fee, I would charge
>> my hourly rate times my estimate times FOUR.
>>
>> An older developer (a friend of mine) told me the same thing once--he
>> said to multiply by between 2 and 5 if I do fixed fee. Is that what
>> people do?
>>
>> I have someone just now who is asking about a fixed fee for a site
>> rebuild. I told her that I would *probably* be willing to do it for 4
>> times my estimate.
>>
>> Just checking in with thelist about this however :)
>>
>> Thanks,
>> Fred
>
I'm still getting a handle on the other thread...  The general problem with fixed cost pricing is, as you say, uncertainty.  Most of my clients are very very small businesses. They are tight and can only deal with a fixed dollar amount.  With them I need to be real careful about the specifics of the project, the limitations. Itemizing the details is crucial.  Specific pages, simple vs forms, training, documentation, licensing extensions, stock photos, hosting, what SEO is included, future maintenance, subcontracting a designer etc.  Yes I add a little wiggle room, account maintenance, etc, but probably no more than 25%.

Where it occasionally gets dicey is where you start getting regular phone calls on how to do some new thing, or I really wanted the form to do XYZ as opposed to the ABC I described (scope creep).  At some point you have to draw a line. 4x however sounds like you're expecting scope creep to run rampant or there is no finite list of inclusions.

-- 
Bob Meetin
dotted i - http://www.dottedi.biz
LinkedIn: http://www.linkedin.com/in/bobmeetin
303-926-0167 (home/business)