Getting the Most for Your Money
Most professional services offer a la carte or all-in-one billing models. Software consulting is no exception. You may be worried about getting ripped off, and it does take a small investment of time to understand whether what you are being offered is honest, complete and meets the needs of the project.
As you think about what software billing model is best for your company, here is a quick cheat sheet that should offer some pointers of what to be aware of when it comes to consulting estimates:
Hourly Software Consulting
Most firms will offer an hourly rate, although this is not always the best value for the client on every consulting engagement. Hourly rates can be subject to cost overruns. Good software project management can make a big difference in controlling costs.
Software Consulting Estimates
There are several important things to consider regarding estimates:
While free estimates on smaller software projects are common, beware for larger project scopes. Good estimates require work – usually even requiring multiple disciplines (architecture, implementation, integration, project management, documentation, release management). They are also highly valuable in terms of reducing project delivery risk as well as budget risk. For this reason, they should come at a price and take some time. Expect this from a good software consulting firm.
Paid estimates often come in the form of a “scoping exercise” or “scoping project”. This project may be offered on the same price basis (e.g. hourly) as the resulting project, or possibly even a different one. It is common practice for attractive clients to underbid the scoping project so that there is an easier “yes” decision on behalf of the buyer. These scoping exercises can also be a great way to “get to know” your potential custom software vendor. However, be sure that there are clearly identified deliverables at the end of this phase. Unscrupulous vendors may “keep” the scope document if you do not approve the resulting project, so that you cannot use their scope to bid the project out.