We work with many of our clients on an hourly basis so I wanted to share some tips on how you can save on development costs and get great results working with hourly based software developers,
Charging on an hourly basis is also referred to as “billing for time and materials” where the developer is paid for every hour worked. This is appealing to the developer because it lowers their risk of working for free, but you may be wondering how this works to your advantage as the client.
To the unseasoned this may seem like a risky proposition since there’s no guarantee of the final cost, but with an experienced development firm it’s possible (encouraged even) to work on a budget so costs don’t spiral out of control.
In most cases hourly software development will end up saving you money and I’ll explain how in this article.
In the first part of this three-part series on working with hourly developers I’m going to address the following frequently asked questions…
- When does is make sense to hire an hourly based developer?
- How can I save money with an hourly based developer?
- How can I ensure that my project stays within budget without having a fixed price?
When does is make sense to hire an hourly based developer?
The end result of a custom software project is often unknowable early in the project because it evolves as you get your software in front of real end-users and discover what they’re actually willing to use and pay for.
Our company develops custom kiosk software and in my experience most of our clients don’t know what the final product should look like (even if they think they do) because they haven’t had a chance to gather customer feedback from a pilot kiosk or even do a proof of concept.
Many times what they’re trying to build doesn’t already exist (otherwise it wouldn’t be custom), so we’re designing something entirely new without knowing exactly how their customers will receive it.
When there’s a high level of uncertainty in what the final product should look like, as there usually is in custom software, it makes sense to take an incremental approach to development and work on an hourly basis.
How can I save money with an hourly based developer?
You’re probably wondering why I said it can be cheaper working on an hourly basis as opposed to providing a fixed price before starting the project.
This is because when developers are required to give a fixed price they usually pad the heck out of their quote to ensure that they end up making a profit.
It’s common knowledge that you estimate what it will take and then multiple it by at least 2X in order to “be safe.”
When you pay on an hourly basis you’re only paying for the time it actually takes to complete your project, not all of the extra padding developers add to a fixed price job.
How can I ensure that my project stays within budget without having a fixed price?
This is actually easier than you might think. In order to ensure your project stays within budget we encourage our clients to set a monthly budget which we promise not to exceed.
We then work with our clients to create a prioritized list of their features and work through them, starting with the most important, and then stop when that month’s budget runs out.
Then next month the client can decide if they want to invest more into the project or take what they have to market.
This way if our client runs out of budget at least they have the features completed that they really care about and also have complete control over how their money is spent.
We encourage our clients to use this investor mentality where they’re constantly reevaluating their return on investment and are free to walk away from the project at any time.
We refer to this as developing on a fixed budget as opposed to developing on a fixed price.
Next Time
In the second part of this three-part series I’m going to cover several tips for working with hourly based developers to ensure that your project is a glowing success.
Here are all three articles in this series…
If you have any questions or would like to hire us for your next project please contact us and we’re happy to guide you through the process of hiring an hourly based developer.
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