A Few Words on Pricing Alternatives
Fixed Price
Where a distinct block of work can be identified and specified unambiguously, Infosphere
is happy to work on the basis of fixed price quotes.
The very first step in our fixed price contracts is to create a budget estimate
for preparing 2 drafts of a requirement specification. This initial budget estimate
for producing a requirement specification may vary since it is difficult to predict
how long it might take for users to crystallise their thoughts and convey them to
us. The aim of the specification process is to render the development task clear
and unambiguous so the client can later accept the software produced as a result
of it.
A detailed document is drawn up in writing, itemising the functionality to be provided.
This forms the basis of our software development price, software deliverables and
warranty provisions. In the case of fixed price work, Infosphere warrants that it
will provide software that conforms to specification.
Remember, this method has been designed to suit jobs ranging from 1 week of effort
to around 3 years of effort.
Time and Materials
Alternatively, Infosphere can work on a time and materials basis. To begin with,
we require discussions with the client to confirm and clarify the requirements of
the project. Notes are taken during any discussions but these may not be formalised
and may not set the requirement in concrete. The development is based on these notes
and any documents presented by the client.
The software is delivered as a draft rather than a polished product. Errors are
fed back to us for fixing and then a new release is made. We need the client's involvement
in confirming requirements, fielding questions, reviewing drafts and accepting software.
Acceptance may be a gradual process of reviewing drafts rather than conforming to
a pre-determined outcome.
Time and materials work is suited to support and maintenance and jobs which are
developed by iteration. It can offer cost savings to clients because there is less
emphasis on methodology. Infosphere's warranty under time and materials is that
we provide suitably qualified developers and charge only for time spent working
on client-related matters. Please note that time spent fixing errors is a chargeable
task under the time and materials approach.
Price Comparison
At the end of the day, most of our fees are based around the number of hours worked,
whether actual or estimated. The distinction between the two approaches is that
the risk is transferred to Infosphere in fixed price jobs, and retained by the client
in time and materials jobs. For practical purposes, the following items are added
to time and materials jobs to convert them to fixed price:
- written requirement specification as opposed to verbal
- review(s) and redraft(s) of written requirement specification
- written technical specification as opposed to verbal
- testing services
- project management
- provisions for contingency and warranty
As a guide, a time and materials job can be converted to fixed price by adding 50%
to 100%. In reality the difference between them may not be this much since time
and materials jobs inevitably accrue some unpredicted costs, such as alterations
in scope or technical difficulties. These unpredicted costs are not quantified in
time and materials estimates whereas an attempt is made to quantify them in fixed
price quotes.
Infosphere Prices
Our fees fall in the range of $135 to $157 per hour plus GST. This depends on the
nature of the work, the approach taken and the people involved. These prices are
current as at October 2008.
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