Factors Affecting Project Pricing: Key Components and Collaboration Considerations
The price of a project depends on various factors. First and foremost, it is determined by the developer's hourly rate. The more experienced the developer, the higher their rate. Consequently, the cost of the team is derived from the developers' rates. By understanding market prices, one can estimate and calculate the team's cost.
During the initial assessment phase, we already have an approximate idea of how many months the project will take. Additionally, we take risks into account. Therefore, even with a rough preliminary estimate, we can forecast around 80% of the budget. This is possible thanks to our extensive experience of over 10 years in project estimation and IT in general.
Furthermore, the price depends on the scope of work and the tasks that need to be completed. Often, clients who are not technical experts underestimate the complexity hidden behind a seemingly simple feature or application. These issues can pertain to external appearances or server-side functionality. More frequently, questions regarding logic arise because without a detailed project exploration, it is impossible to foresee all nuances and intricacies.
The most interesting aspect is when we developed our own product within the company. We created an ERP system for bottled water suppliers, which we later successfully sold. At that time, even as developers who envisioned the product, it was incredibly challenging for us to consider all the intricacies of the product at once. Consequently, we divided the estimation process into several stages, including the discovery phase. However, we couldn't anticipate every setting, button, interconnection, customer-related risks, or interface conveniences.
This case became highly instructive for us, as we realized that not only is it difficult for non-technical clients to describe and comprehend the intricacies of a project, but even a technical team finds it challenging to quickly articulate every aspect of a project.
That's why it's crucial to work with teams that have expertise in specific domains or industries. They are already familiar with all the intricacies, interconnections, and most of the risks that may arise in your project, allowing them to provide valuable advice. The team's expertise in a particular segment or domain also influences the cost. For instance, you might approach a team with skilled developers, but if they lack expertise in supply chain management, they may struggle to grasp the complexities and interdependencies involved at various stages. Consequently, such a team will spend more time on exploration and refinement of these nuances, ultimately affecting the project's cost. Therefore, it's not always the case that a cheap and experienced team can deliver a project at a lower cost. Statistically, it's more advisable to hire an experienced team in a specific field, even if they come at a higher price, as they can complete the project with minimal time investment.
Thus, the cost of a project is influenced by the developers' rates and the team's expertise in the given domain. Another factor impacting the project's cost is the need for documentation. Often, clients prefer to skip documentation to save a portion of the budget. However, this approach can lead to greater long-term expenses. For example, if a developer needs to be replaced and there is no knowledge base, requirements, or descriptions of the existing functionality, the new developer hired by the client will spend more time understanding and unraveling the project, resulting in additional costs for the client.
Furthermore, the price is dependent on who will deploy the project on the server—whether it's the client's team or the development team.
领英推荐
It's worth mentioning that clients often overlook potential risks, which later arise unexpectedly. For instance, while the project is being developed, a new version of iOS or Android may be released, necessitating additional modifications that require additional funding. Unfortunately, it's impossible to predict such events. Only by identifying and accounting for risks in advance can you effectively address them.
Another pricing factor is the interaction model with the contractor. We will delve into the most common models in more detail in the following article.
Stay tuned for our upcoming article, where we will delve deeper into the different collaboration models and provide valuable insights for making informed decisions about your project's development process.
Don't forget to follow us on LinkedIn for more industry insights and updates!