When do you charge your client for software development project?
- Thread starter eddyyss
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Out of curiosity, what type of clients do you have - are they SMEs, large corporates, government? My clients pay on accepted progress (whether it's agile or waterfall).. Can't see them ever agreeing to up front payment... theymay as well use contractors... and even then, it's never up front...
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billybob99
Depends on the size of the project, usually run with bi-weekly sprints. The whole point of sprints is to assess whether what you're building is viable, re-assess and then tweak.
It's all transparent on Jira, every client can view all user stories, tasks or whatever bug fixes are going on whenever they want - most don't even bother, they just wait for the test build to be pushed out and test it on a real device.
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billybob99
That's the problem with software dev, everyone is offering it. I had the same problem until I saw a video that said if you can find 100 people doing what you do, its too crowded.
I took a step back and noticed I either had to change the vertical or change my offering. I could either offer a very specific service to everyone, or general software dev to a specific vertical, i.e. the construction sector.
I decided to offer a specific service to everyone.
In close to 10+ years in this space, apart from government/council clients who pay net 30 (but there is always an approved purchase order in place), all other clients, Audi, Premier Inn, Budweiser, Waitrose to name a few have all paid upfront before each sprint.
If you don't have the balls to enforce your own T&Cs and payment terms, you need your client more than they need you.
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billybob99
Sounds like your clients got you wrapped around their little finger mate.
They engage an agency who is a specialist and competent in their given field for a reason, its not their job to keep you sharp and delivering.
That's like putting a GoPro on a postman and making sure he puts the letters thru the letterbox properly.
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Have you seem how unreliable posties can be? ;-)
We operate in a specific vertical in what could be seen as a niche industry. In the UK, there is one other UK grown competitor and one foreign. We also don't operate on an agency basis - we have FTEs - not even contractors. if we need extra capacity, we actually go to our competitors and when they need extra capacity they come to us.. although wher we can, we will use staff from foreign suppliers who don't even operate in the UK... Seriously, if there were 10 genuine competitors world wide (excluding about 20 freelancers), no one would make money - we all know each other, too.. and we all meet once a year - usually.
We operate on a cost-plus basis with open books, which Jira is excellent for. However, the clients all pay in arrears.. it's just the convention of the industry.
Do we need our clients? Well, yes.. it is niche; do they need us; well, yes or they could be shut down. However, I am tiring of workiing in the same area and I was just surprised that others pay in advance at a B2B level.
We operate in a specific vertical in what could be seen as a niche industry. In the UK, there is one other UK grown competitor and one foreign. We also don't operate on an agency basis - we have FTEs - not even contractors. if we need extra capacity, we actually go to our competitors and when they need extra capacity they come to us.. although wher we can, we will use staff from foreign suppliers who don't even operate in the UK... Seriously, if there were 10 genuine competitors world wide (excluding about 20 freelancers), no one would make money - we all know each other, too.. and we all meet once a year - usually.
We operate on a cost-plus basis with open books, which Jira is excellent for. However, the clients all pay in arrears.. it's just the convention of the industry.
Do we need our clients? Well, yes.. it is niche; do they need us; well, yes or they could be shut down. However, I am tiring of workiing in the same area and I was just surprised that others pay in advance at a B2B level.
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billybob99
It's not uncommon, a well known player in the same space sold for £20m 4-5 years ago now, they were charging £10k a month retainers to each client - if you needed actual work done they'd charge you after it was done on top.
Before you could actually begin any sort of development, you'd have to go thru a 3 day "workshop", their office or yours it didn't matter, but it would cost you £10K for that 3 day pizza party.
In this industry everyone is rolling with everything purely because "that's how we've always done it" approach.
If you provide any sort of intrinsic value to your clients, they'll be happy to pay for it, even if it means upfront.
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billybob99
Good for you, the client has to have some skin in the game. Not everything in life is pay after delivery.
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Same as @billybob99 - initial deposit for the project, then upfront deposits for an agreed set upon milestones. We do 2-week sprints following an agile methodology to ensure there is a feedback loop to move the project along. Although with that said seems to be a trend towards the Basecamp Shape Up 6 week cycles which may be worth investigating.
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I get money up front before doing anything. Had a project a little while back to integrate a form with MS Dynamics CRM. I knew it was going to be hours and hours of research (because MS documentation is rubbish) so I got the money first. It cost them a fair wodge before I did the first line of code.
Got a project right now where they have paid for some analysis. It looks likely it's probably not going to be viable so the money won't have been wasted, it has saved them thousands.
Most of the money on anything is spent on research. Doing the actual coding is often the easy bit.
Got a project right now where they have paid for some analysis. It looks likely it's probably not going to be viable so the money won't have been wasted, it has saved them thousands.
Most of the money on anything is spent on research. Doing the actual coding is often the easy bit.
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Times have now changed! I am now levying Advance Fees for ALL Clients (Not IT Work). Payments are made at Work Stages aligned to Deliverables and Change Orders!
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billybob99
That's what I'm saying, just because someone hasn't seen something doesn't mean it doesn't happen.
Times changed in the software industry a long time ago from upfront payments, to smaller, regular payments - to £10k a month retainer just to talk to you.
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Our clients aren't credit risks and pay on time, so we factor it all into the equation. As we are on open-book cost-plus, they know how much they are going to pay (and if they start throwing changes in, they know its going to cost them more, so unless there's a darned good reason to do so, they don't). For these two clients, I am not worried about up front payment.
However, we are looking to branch out.. I was considering writing some packaged software but dropped that idea... But, if times have changed, it is an interesting change... Thanks chaps!
However, we are looking to branch out.. I was considering writing some packaged software but dropped that idea... But, if times have changed, it is an interesting change... Thanks chaps!
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