The basic forms of pricing are Fixed Cost (FC) and Time & Material (T&M). Depending on the size of a project, and customer wishes, we use either FC or T&M or some hybrid schemes. Under fixed-cost schemes, the cost is known in advance so that you can plan your budget. We take all the risks. This scheme is used for relatively small projects (usually no more than 5 man-months) or projects with stable and clear requirements.
Time & Material projects
The Time & Material option is normally used for longer-term projects or projects where total effort cannot be accurately estimated in advance. Sometimes scope of the work can vary during the implementation. Such projects also fall under T&M category. The payment is made on a time-rate basis.
It is important for long-term projects that our dedicated team will be able continuously to learn about both your business and your technology if our performance is to improve continuously.
We also use some hybrid models:
- T&M->FC: We conduct system analysis and develop requirements under T&M, then using the requirements we estimate total development effort and develop the system under FC
- FC->FC: We conduct system analysis and develop requirements under FC, then using the requirements we estimate total development effort and develop the system also under FC
- FC->T&M: Develop initial version of a system under FC model, then all changes implemented under T&M model
Fixed cost projects
When a customer comes to us with hist Vision of the project, we can provide a very rough estimation of the cost.
For a better estimation we arrange interviews with major staff and write a high level requirements document, which is also called BRD — Business Requirements Document. It usually takes 3-5 days to complete it.
This document is approved by client company top management and it helps to estimate project cost. The error of the estimation is about 60%, i.e. we can guarantee that the implementation cost will be between $30.000 and $50.000.
If this document looks good enough for the customer, we write a Functional Requirements Document — FRD. It usually takes 4-6 weeks and cost about $2.000-$5.000. After FRD gets agreed on by both parties we can provide an exact implementation cost.