Software Houses

[Pino]

I've now gone it alone as a Developer and I have a fair amount of work lined up. in the past I've always completed projects then taken payment.

Now however projects have increased in time. Is it usual to wait till after the project or take a certain percentage of the money up front?

Thanks

[Kasracer]

The last consulting company I worked for charges their clients monthly on how many hours were worked that month (so if a project lasted longer than a month they still got paid).

I would suggest at least taking some sort of payment before the project is done (either a down payment at the beginning or something in the middle) and make sure you have solid contracts

[si_the_geek]

For longer running projects, it is usual to take regular payments (monthly, or sometimes even weekly) for the work done so far, right up until the project is finished.

[szlamany]

We've done it so many ways over the past 20 years.

We mostly did percentages - like 25% downpayment (initially - no work completed yet) - then 25% at certain milestones - with the last payment after acceptance. This was for projects in the $50,000 to $100,000 range. Larger projects we are typically at the whim of the customers/lawyers since the $$'s are so large.

Smaller jobs were paid at install time - no acceptance involved - and we supported problems after install for no fee.

Enhancements to existing products we typically cost out the job and charge upon install.

Installations to new customers of existing products were typically paid in some stages during the conversion, training and install process. Then 15% annual maintenance fee for continued use (support and all).

All of this leads to some pretty awful cash flow inconsistencies!

We have now pretty much changed our business model going forward to be more "service fee" oriented. We charge based on the size of the customer a fixed monthly fee. This goes on forever - which is nice for cash flow purposes. We allow the user to request any and all enhancements or desires and supply them at no additional cost - all for that fixed monthly fee. The fixed monthly fee was pretty much arrived at by taking our original "cost" and adding 5 years of 15% support - taking that whole amount and dividing by 60 months. We don't advertise that we used that method - but it's basically what we did.

Getting paid up front for something that takes 6 months or a year to install and train makes no sense - might feel good - but in the end you take a bath. Getting paid over the life cycle might be less $$'s up-front but we expect that the stability will be worth it.

I'll get back to you in a year or two and tell you how all this worked out for us

[KiwiDexter]

My wife's company. web design and development, charge 50% of the quoted price up front, the remainder on client acceptance pre delivery to production site. She can tell me that's pretty normal for web companies.

I used to, now employed full time, charge fortnightly for all hours worked in the fortnight or a standard 12 month maintenance fee once a year for use of the software, upgrades etc (Industry specific finance + distribution system).

[alex_read]

The software house I worked for used to charge a third upon completion of the initial functional and database specs and designs (so they'd get paid if the company went elsewhere for the work to get done), then charges based upon releases - half upon initial completion - beta 1, then the other third split between beta 2, then go-live.