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What ensures the Transparent Custom Software Development Pricing

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What ensures the Transparent Custom Software Development Pricing

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Custom Software product Development - time and materials - pricings model - Transparent Pricing - dedicated team - lifetime code warranty - successful business - project planning - price of software development - supplier and customer - business - overpay - eliminate risks

Custom Software product Development - time and materials - pricings model - Transparent Pricing - dedicated team - lifetime code warranty - successful business - project planning - price of software development - supplier and customer - business - overpay - eliminate risks

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What ensures the Transparent Custom Software Development Pricing

  1. 1. How To Get Transparent Custom Software Development Pricing Halyna Korolevska Content Manager
  2. 2. The startup founders and managers want to get a quality product but they worry about overpaying for the services of an IT company. According to cbinsights.com, pricing and cost issues are among the top 5 main reasons of startup fail.
  3. 3. The formation of a transparent custom software development pricing includes the following steps: I. Quality project planning II. Choosing the right pricing model III. Contract with indicated planning results IV. Experience and reliability of the development team
  4. 4. І. Quality project planning To make your tech startup successful, you need to carry out the strategic and tactical planning. This planning with the help of IT consulting helps you to plan all aspects of the project in a way that prevents the risk of overpaying for the custom software solution development. During tactical planning, you carry out: ● architectural planning ● operational assessment ● implementation planning
  5. 5. So you need to: ● create a logical architecture for product development, define milestones and specific tasks, ● discuss all organizational issues, estimate the work load, assign different tasks, ensure that you have the appropriate quality and quantity of performers, and the necessary finances, ● choose a methodology for development (scrum, waterfall or another), ● select the appropriate pricing model. І. Quality project planning
  6. 6. II. Choosing the right pricing model Pricing model is a way in which the cost of software development services and the method how the customer pays for these services are formed. Types of pricing models: Fixed price - Fixed Price Time and Materials FFF - Fixed time, Fix budget, Flex-scope Dedicated Team Milestone based model
  7. 7. 1) Pricing Model - Fixed Price Due to this model, the exact cost and terms of startup development are determined and do not change for the client. But if the client wants to add a new function that is not in the documentation, after the agreement of the parties, it's drawn up by an additional agreement to the contract. Pros - Works for medium, small projects, and MVP - the cost of startup development doesn’t change for a client - Strict adherence to the development deadline and result predictability - The price remains fixed until the customer has changed the requirements - Does not require client control Cons - Preparation takes a lot of time - Detailed documentation is required before the development - Not suitable for working on large and complex projects - Partners agree on the necessary changes and indicate them in an additional agreement to the contract - The execution of additional agreements to the contract may slow down the development II. Choosing the right pricing model
  8. 8. II. Choosing the right pricing model 2) Pricing Model - Time and Materials This model is characterized by more flexible terms and costs. The customer pays for the actual working hours of the developers at the rates previously agreed with the IT company. Client pays gradually as sprints or tasks are performed. Pros - Works for long term tech projects - Gradual payment for the finished result - Quick start - no need for lengthy planning and documentation - Process transparency and contact with the customer throughout the project - Ability to make changes in the development process Cons - Not fixed startup deadlines - Unable to accurately plan your budget - Time required to work with the project development team
  9. 9. 3) Pricing Model - FFF — Fixed time, Fix budget, Flex-scope With the FFF pricing model the deadlines and budget of the tech startups software development cannot be changed under any conditions, which includes work scope adjustments. So customer plans a budget before beginning a startup, knows its final cost, and date of release. Pros - The ability to get a quality product with a limited budget - Strict deadlines - Changes in the scope of work do not affect the development cost - The contractor and the customer collaborate in the development process Cons - Constant customer cooperation with software solution vendor - The executing company should be flexible in its work, make sure that it does not exceed the budget and plan its work well II. Choosing the right pricing model
  10. 10. II. Choosing the right pricing model 4) Milestone based pricing model At this pricing model the work development scope is pre-divided into separate parts, or milestones. In turn, depending on the importance, IT company completes one milestone & proceeds to the next. Thus, customer pays the planned costs for each successfully completed milestone. Pros - Customer pays for individual workloads - The client doesn't pay one large sum for the entire project development - The team performs tasks efficiently - The client pays for the actual provided functionality - Low risks, transparent work, and predicted results as client controls the project Cons - There is no fixed price because milestones have different costs - There is no way to determine the exact release date - Approximate project budget
  11. 11. 5) Pricing Model - Dedicated Team Before project development, the software customer and the IT company discuss the requirements, workload, and calculate the time needed to complete the project. The software development company provides the customer with a dedicated team of necessary IT professionals. Each month, the software customer pays for the work of this team. Pros: - Works for complex long-term projects - Client significantly saves on infrastructure - The client fully manages the development team - Dedicated team devotes 100% of its working time to your project and deeply understands your product - The team works on a long-term basis and is interested in quality Cons: - Dedicated Team pricing model is the most expensive cost wise - Big expenses and time for managing a development team II. Choosing the right pricing model
  12. 12. ІІІ. Contract with indicated planning results One of the most important components of the qualitative formation of a transparent software development pricing is the preparation of a contract between the customer and the vendor. It gives certain guarantees to both parties and eliminates many risks.
  13. 13. ІІІ. Contract with indicated planning results In contract the partners write the results of IT consulting, namely: - all estimated tasks (or sprints, milestones), - the number of required people in the project team and their specialization, - technical issues - organizational issues - the selected pricing model that we talked about in the previous section, - financial expenses and the cost of the project (if possible according to the project type). - code warranty. It means that the final price of the development will not change due to the fault of the vendor. If something happens, service supplier will do troubleshooting for free.
  14. 14. To implement a successful project, you need a reliable team, a software vendor, which: - has lengthy experience in software development, - finishes projects on time, - gives certain guarantees, - offers reliable protection of your data, - provides complete confidentiality of the entire development, - concludes a contract. IV. Experience and reliability of the development team
  15. 15. To provide transparent custom software development pricing for your business you need: - to carry out the quality project planning - choose the right pricing model - enter into a contract - work with a reliable team. Learn more detailed information about the transparent pricing in custom software development in the article on the blog of MassMedia Group's website.

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