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Charge for preparing a quote?

I've been contacted by someone who wants some custom software written.  This software involves calling a third-party web service to retrieve and display information on a website.  I've got the documentation for the third-party service, but my intuition is that this could be a tar-pit as I don't really have much else but a verbal description of what they need.  My impression is that they've got a vague idea to copy a competitor (given an example site to copy) but don't really have a clear-cut strategy.  As such, I don't want to quote unless I do some serious research into what I'm looking at.

As I see it, I've got a couple of choices:
1) decline to provide a quote and wish them well
2) finger in air, best guess, but stick with time + materials and progress payments
3) ask person for, say, 4-6 hour contract to research requirements, investigate third party platform with some prototyping and prepare a proper system requirements document.  Provide quote with requirements document and let them make decision from there.

I'd really appreciate if the bos community could help my thinking on this one.
Bruce Chapman Send private email
Thursday, September 10, 2009
 
 
3
Anonymoose Send private email
Thursday, September 10, 2009
 
 
Bruce - I agree you can't invest considerable time for free, but if you go with #2 I'd suggest you call it an estimate rather than a quote and include something like "we use our professional skills and experience to try to provide accurate estimates; custom software development includes considerable unknown factors  that may alter the true cost of the project. We are committed open, honest communication and keeping our clients informed of the current project status throughout all phases of development." With quotes the customer is essentially looking for a guaranteed downside, which is impossible.
Mark Dochstader Send private email
Thursday, September 10, 2009
 
 
#3, if that doesn't fly possibly try #2
Jason Send private email
Thursday, September 10, 2009
 
 
These situations have been discussed quite a bit here over the years.

Fixed price is high risk unless you are confident you can estimate very accurately, and that is because you have done it many times before and know for a fact you are able to.

Given that you are an accurate estimator, if it's not something you can quickly estimate ("How much for 3 static web pages with 5 photos?"), then you break the project into 2 stages. First stage is requirements analysis and so forth. It might take 1-12 weeks. AT the end of this stage the product is a written specification and estimate, which they can take to anyone to implement.
Scott Send private email
Thursday, September 10, 2009
 
 
If you go with #3, you could consider offering to credit the amount they pay for the quote (or a portion of it) towards the project cost should they choose to engage your services.
David H. Send private email
Thursday, September 10, 2009
 
 
Yes my fingers have been so burnt with fixed price quotes for anything I won't touch it anymore, unless it is for extremely small amounts of work.

I think I'll do an option 3, melded in such a way that it appears to be phase 1 of the project, rather than just a paid-for-spec.  Call it the design and estimation phase, and commit to a price for it.  This is a good idea (thanks Scott)

That way I can do some prototyping and see if I can identify the obvious pitfalls to be avoided, and come up with a solid design before writing any code. 

It will also sort the client into either the 'something for nothing' basket or 'happy to pay for results' basket.
Bruce Chapman Send private email
Friday, September 11, 2009
 
 
#3.

For reference, it's commonly called an NRE charge:
http://en.wikipedia.org/wiki/Non-recurring_engineering
Nicholas Hebb Send private email
Friday, September 11, 2009
 
 
I'd really consider looking into (google) agile contacts and use a scrum based process. I get the feeling that the costumer has rough vision of what they want (by looking at other sites) but they are lacking the details. Basically you 1) commit to a number of hours at a fixed rate, 2) regular deliver and demo small working increments to the customer and 3) allow the customer to change the direction of where the product is heading.

It could be of interest to study "Money for nothing and change for free" by Jeff Sutherland (e.g. here http://jeffsutherland.com/scrum/Agile2008MoneyforNothing.pdf )
Jonas Linde Send private email
Friday, September 11, 2009
 
 
> I'd really consider looking into (google) agile contacts and use a scrum based process

Great in theory - until faced with a real life paying customer. They want the answer to 2 simple questions:

1) When will you be finished?
2) How much will it cost?

Regardless how you dress up an agile approach, in the customers eyes, they are essentially a cost plus contract and all the schedule and cost risk is loaded onto them.

Unsurprisingly, customers aren't as keen to go down this route as the developers.


Bruce - Given the detail you put in option 3, I suspect you'd already made up your mind ;-)  I would go with this as well.
IanH. Send private email
Friday, September 11, 2009
 
 
I would decide how much time I was prepared to put into the quote/pitch based on how much the business was worth and how likely I thought the customer was going to go for it. I would then spend that time creating the quote. I guess the greatest risk for a fixed price quote is scope creep. Therefore I would outline what the quote did & did not cover so that there would be no mistake what was in and what was out.
Glyn Darkin Send private email
Friday, September 11, 2009
 
 
Hello,

---quote:---
they've got a vague idea to copy a competitor (given an example site to copy) but don't really have a clear-cut strategy.
-------------

Red flag!

#1.

I 'd avoid those customers. They are hard to satisfy because they don't have a clear strategy/use for the application. Their only reference is the competitor's list of features. They tend to delay to sign off.

If you want to build their app (challenge?), make sure *you* set the features and pinpoint the exact behavior of the app. Make it clear you don't guarantee any benefits.

Good luck Bruce.
MCoder Send private email
Friday, September 11, 2009
 
 
There's nothing wrong with charging for a quote - provided they know they are going to be charged.

What I would say is:

1.  Your project is a major piece of working, likely requiring many days/weeks/months (as applicable) of work to complete

2. Your day rate for any such work will be $X plus expenses

(1+2 this will give them an order of magnitude of the likely costs, and hopefully put them off if they are thinking they can pay you a pittance for a big project - there are always such people out there - you know, "write me a google for $100").

3. You recognize that they will need a more detailed budget before giving you the go ahead.

4. You also recognize that they and you need to identify the exact requirements, research available technologies, etc.

5. Therefore you can produce with them an outline requirement documents (just 2 or 3 pages), including estimated costings for the work to do the actual project, after 1/2/3/Y number of days of research, costing $Z.  Would they like to go ahead with this step?


If they are serious about potentially spending thousands, they should have no problem agreeing to $Z
S. Tanna Send private email
Friday, September 11, 2009
 
 
By the way,

1. the above doesn't need to be fixed price - you could include approximate disclaimers, risks, etc.  in the document

2. one reason to make such a document,  is it should pin down exactly what you have to do to finish.  This is pretty much essential - how could you be expected to give any sort of estimate of the cost, without knowing what it is you're supposed to be finishing
S. Tanna Send private email
Friday, September 11, 2009
 
 
Always Time & Materials if they don't have detailed specs and know exactly what they want (which few ever do...).

The idea of preparing specs for them I'd be really wary about, because they may not even know how to read specs and will just say sure sounds good but then want to change their minds later and insist on your original firm fixes quote. But if they write the specs you know they know what they want.
CC Send private email
Friday, September 11, 2009
 
 
Thanks for the replies everyone.

I've spoken to the person involved, they've agree to pay for a a 'spec phase' of the project.  I'll use this time to put together a design of how it will fit together and then give them a firm price to complete the work, with exceptions for scope change.

I'll see how they go once given the likely cost of the project, and once presented with a design.

My next challenge is finding a taltented resource to help me complete the project!  That's a topic for another day.
Bruce Chapman Send private email
Friday, September 11, 2009
 
 
It is flat out a bad idea to give any quote without a spec, and estimating is going to be a question of guess-work... take your guess and multiply by at least 2!

My company offers "help you develop a formal spec" as one of our services... this can take several days/weeks at our highest rates (since it's a much more specialist task) and then the customer is free to take the spec elsewhere to get bids on the work if they prefer.

4-6 hours isn't much to get any kind of idea... that would only move me from 'total guess' to 'informed guess' on a project without a spec. Even with a full spec, estimating the time required could take a  day, and getting a spec could take weeks if the customer doesn't know what the requirements are.

Remember, both writing a spec and gathering customer requirements are skilled jobs even though they don't involve coding.
A)DO NOT TRUST YOUR CUSTOMER TO KNOW WHAT THEY WANT
B)DO NOT TRUST THEM TO EXPLAIN IT PROPERLY EVEN IF THEY DO
John256 Send private email
Monday, September 14, 2009
 
 
I knew of a company that charged for PC hardware quotes.  After the quote, the customer was free to buy from wherever he wanted.  If the customer bought from the quoter, the payment for the quote was applied against the purchase.

It is certainly one way to sift out the tire-kickers and the people who would simply shop such a quote with a box seller.

Sincerely,

Gene Wirchenko
Gene Wirchenko Send private email
Monday, September 14, 2009
 
 

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