Estimating - What do YOU charge?

[frykhan]

There are developers here of all sorts, but for those of you that do this professionally and more specifically freelance, what do you charge? I know typically with estimates you try to get an idea of the time involved and then multiply by a wage rate. In many cases, there is probably the aspect of competition and industry standards that define the scope of what you could actually charge and successfully be hired. Does anyone have a good starting point? My situation is a little unique- I've already developed a database "in-house" for a small financial company, but I'm actually in the process of changing jobs and they asked me for a price for another database that I could do in my spare time. I'm hesitant to just throw out a price, because I tend to undervalue my work.

Any help or direction would be appreciated/useful.

[RhinoBull]

It isn't only the "industry standards" that's in command - it also depends on the region you live and work.
You may charge $150 per hour in one place and people will be more than happy to pay that rate but in most other places they won't even talk to you...
So, you have to look at the whole package: length, complexity, etc, etc, etc...

[si_the_geek]

There are two main things to take into account.. the number of hours, and the price of your time.


The first thing to do is find out the specifications, in as much detail as possible - preferably in writing.

This will allow you to estimate the time you will need to do the work (to which you should add 10-20% to give you some leeway in case things go wrong - you can always give a discount/refund later if you want), and having it in writing means that if the specifications change later (as they tend to!) you can add on the extra cost for your time (which you should, as they want more work from you).


As to the price of your time, don't consider anything less that they would have paid you in your in-house role anyway.

Have a look around on job websites, and see what rates are being offered in your area for contract work for the languages/tools you will be using.. these will typically be noticeably higher than a permanent role, so you may want to go a little lower than them (but not by much).


Once you have both of these values, you can work out the overall price and show it to the company (you could do as I do, and also show the hours & price per hour - but this means your total amount is likely to change if you finish early).

If they feel your price is too high you can always negotiate, but if your price is "too low" it is already too late (unless they are really generous!).

Given your situation, they will be keen for you to do the work rather than anyone else, so don't feel bad about needing to negotiate if it comes to that.

[Hack]

If they feel your price is too high you can always negotiate, but if your price is "too low" it is already too late (unless they are really generous!).

This is really the key. Always go in asking for more than you actually want and let them bargin you down to a price you were hoping for in the first place.

[frykhan]

Thanks guys for the help-

RhinoBull - Very true, from Monster and Dice it seems the median salary is around 50-60$ an hour (Philadelphia Area) so I guess Ill start with that in mind.

SI - Thank You especially for the detail. Lots of great points there, so I'm gonna go home tonight and ruminate on them, and find my initial offer. I think I'll definitely try to break it down for them and give them a fair shake, because it would be nice to have some decent references; and if I make them aware I'm building in spare-time to the offer and then charging them slightly less at the time of release they'd probably be impressed with the honesty. THANKS a ton.

Hack - Yeah, here is where my problem lies, because I'd rather not scare them off I'm always afraid to go too high and have them balk completely. Its a nice opportunity to add to my portfolio of work, since I've only got 2 professional databases under my belt and 1 data acquisition prog.

[RhinoBull]

... from Monster and Dice it seems the median salary is around 50-60$ an hour (Philadelphia Area) so I guess Ill start with that in mind...

Well, $50-60 p/h is what consulting company pays to consultant but the actual rate that they charge to their client is much highier so as the others are saying do not underestimate yourself - be a little more agressive and leave yourself a room for negotiations.

Good luck.

[Slaine]

We also take into account any ongoing work that may come out of the contract.

A recent example was when we lowered our quote for a peice of work because we knew we could gain additional revenue from support, and it would tie in our client to our other products.

[Slaine]

Well, $50-60 p/h is what consulting company pays to consultant but the actual rate that they charge to their client is much highier so as the others are saying do not underestimate yourself - be a little more agressive and leave yourself a room for negotiations.

Good luck.

When I first started out we used to severely undersell ourselves, working for the bare minimum - terrified that putting in a high quote would scare off the business.

Things have changed though and I now find we get a lot more business giving realistic quotes that are significantly more than previous - and it adds a lot more 'authority' to our company.

[BramVandenbon]

there are methods to do cost calculation of software projects : such as COCOMO (currently version 2, I think).

Personally I'm not freelance. I recently signed with a Java Development company in Belgium (central europe). And I would just like to add that if you are working as an employee that you can't rely on numbers you hear on internet, because it's very culture related. In Belgum a brute 2000 EUR/month wage is no exception(1300 EUR/month net). From Polish and Romanian friends I heard 200 EUR/month is a fair wage in their country.

That's a factor 10. I'm not saying one is better than the other, because I honestly believe it's just a matter of the total economy of the country. For example, I pay 1.20 for a can of Coca cola. In China I payed 0,5 EUR. Everything is more expensive here. I pay 5.5 EUR for a microwave-meal. And that's not even healthy. ...

Besides that, allthough I'm not saying Belgian developers are any better or worse than software developers of other countries. But personally I've been studying software development for the last 7 years (and I'm only 22), 2 in secondary school and 5 in university. I have 4 diplomas (2 bachelors and a master degree) to guarentee that I understand what I'm doing. That's a quality and reliability label which makes me worth 2000/month. We worked hard and planned our entire life to earn this, it's not something we decided yesterday.

And I believe software development has many levels and fields. Even though I try very hard, I can't respect webdesign or RAD as much as OOP or research, ... maybe because of my own background. OOP and research are more to the engineering side. I concider webdesign and RAD more like blue-collar jobs, while OOP, analysis, design, architecture and research are more like white-collar jobs. ...OOP is a bit harder imho, and that's why there's such a big demand for JAVA developers at the moment. Prices are high, but still positions don't get filled.