[thelist] Fixed Cost Estimations

[Fred Jones]

On Thu, Jul 21, 2011 at 3:25 PM, Randal Rust <randalrust at gmail.com> wrote:
> We do everything by hours, and we track time on every project. On some
> projects, you lose, on some you win. But in the end, you manage
> everything towards a net gain.

I could never work like that. To lose on a project, hoping to make it
up on the next--I think I would be unable to be friendly and do a good
job on such a project. :)

On Thu, Jul 21, 2011 at 4:25 PM, Lee Kowalkowski
<lee.kowalkowski at googlemail.com> wrote:
> eek!  4x also means you might have estimated 4x more effort (it might
> be easier to do than you expect).  So your strategy is to bill up to
> 16x of what it takes.  That's not competitive, competition is usually
> riskier.

I have almost never underestimated a job. Most folks I know are the same.

On Thu, Jul 21, 2011 at 4:33 PM, Bob Meetin <bobm at dottedi.biz> wrote:
> 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%.

I also work with small clients. What you say makes sense.

> 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.

Perfect examples of what I am worried about.

> 4x however sounds like you're expecting scope creep to run
> rampant or there is no finite list of inclusions.

OK, perhaps 4x is too much.

On Thu, Jul 21, 2011 at 5:53 PM, Matt Warden <mwarden at gmail.com> wrote:
> The challenge you are describing is just a situation where the
> difference between what they are willing to pay and what you estimate
> your costs are, is smaller than is comfortable. So, if your estimate
> is wrong in the wrong direction, then you will regret taking the
> project.

Exactly.

OK, I will think on this more and get details. The "client" in this
case is a designer I work with. It's her client, but they need a lot
of coding work that I would do. So I can tell her I estimate 40 hours
or whatever, but the fixed fee will be 80 times my rate. She also
understands about some of these issues. :)

Thanks for the feedback,
Fred