Hey, this is Overpass Insights! My name is Eric I make apps! Now today,
I want to talk about how much you should charge your clients and why risk is important.
Alright, so today, I want to talk a little bit more about pricing and this time - pricing, I
don't mean how much you should charge for your app on the App Store. although we have done that topic
before and we'll probably talk about it again. No, today I want to talk about working for clients and
how much you should actually charge your clients because this is a question I get a lot on this
channel. Either in the comments or sometimes people will email me. They'll say, "Eric,
I got a guy who wants me to do his app for him how much do you think I should charge him, right?"
Which is really difficult to answer. Or they'll say if you did my app for me without telling
me anything else how much would you charge or sometimes I've even had people call up and pretend
to be clients or pretend to be prospects so they could say oh yes I'd like to have an app done just
so they can find out how much I would charge I mean one guy it was even he was talking to for
five minutes he said I have to be honest with you actually it's my brother he's you know he needs to
do an app for a friend and we don't know how much he should charge and that was almost fun to tell
him I would say okay make sure you consider this this and this so this video is kind of the same
thing I want to talk about the methodology for pricing out a client project at least the one that
I use which might not be very Orthodox because I don't know what other companies do and some of the
considerations that go into it for those you guys who are doing it so it's more for this is more
for my fellow developers who are looking to get into client work and some of the things to think
about so now I've talked about it before sometimes for a project I will do the code myself which is
the it's easier to quote for because I can think about how much time this will take how much time
how much my time do you think it will take I have to consider what the client is like you know are
they are they likely to add form or scope creep have they asked for too much stuff all together
and you know and how much testing time do I think will be needed so it really is so take everything
you're doing and then add a significant markup on it because something might happen now also a
lot of the times especially on the larger projects we work with outsource teams so it's a case of you
know they're giving me a quote on something and the designers are giving me a quote on something
and we have to coordinate all that kind of stuff so I have a look at my iPad here and I'll show you
some of the different ways that we work in the past and some of the ways most of our projects
work and then how some of the alternative ways of doing it so here we got a client comes to us and
says I need this app done or you know I have this requirement or I have this business and we need
an app done you know how much would it cost to do it a lot of times that will be it'll come to me or
Rowena they come through a form on our website or they'll email or they'll just phone up and we'll
ask a few questions arrange a phone call so we could talk about the details more specifically and
then try to give a ballpark quote something to say okay based on what you send it a ballpark quote is
not after requirements gathering it's like based on a lot of different assumptions saying okay so
you're saying you need this this and this what you also need this okay all right so based on that I
think we'll probably be between this value and that value and it's different for every single
project right so that they might agree to it and then I'll go to the developers and sometimes the
developers will be involved in the ballpark it depends on how quick they can be sometimes they
just they ask far more questions so sometimes I'll just do the ballpark myself and other times
they'll say you know they'll get involved and I've got my designer we got designers on my team
but then sometimes depending on the requirements might need to go external to get a designer either
good up work or go someplace else to get another designer so and now in that case we'll go back to
the to the client and we'll give them the ballpark or we'll give them the quote and they can either
say yeah that's fantastic or they could say oh it's cheaper than I thought it would be which
is you know it's kind of good and bad to hear like you're thinking oh man or they'll say oh it's way
too expensive and that happens that happens from time to time they say it's way too expensive it
probably happens about 40 to 50 percent of the time and in that case usually what I'll do is
I'll make a secondary proposal because it is even I sometimes even I'll give a quote like based on
what they tell me I'll be like you know I'll give them a quote like this it's probably costly this
which is like as a sales person it's really really bad so I give them an alternative way of doing it
I'll say look I worked with offshore developers I worked with other designers right what if I
put you in touch with them and you just work with them directly so you could work directly with the
developers that I use I'll recommend somebody I've got like a bunch of the teams that I work
with and then I'll get you know I'll put you in touch with either our designers or some designers
that I worked with in the past or it can help you find somebody based on what you're looking for and
you could hire me for my time and materials and we'll help you write the specification and we'll
help you do all that kind of stuff and it will be a lot cheaper so this way is much cheaper to get
done now do you know why that is because in this scenario the user or sorry the customer the client
takes all the risks of the project and this is huge and this is something we don't talk a lot
about where we talk about quoting we talk about how much markup you should add or how much you
should you know how much testing time you should put aside or how much you should account for scope
creep but we don't talk about the risk of the project see this type of project here I assume
all the risk of the project like if the developer gets hit by a bus if they die or if they're just
for some reason they're unable to deliver or they get ill you know then that that all falls on me I
got to find another design I gotta find another developer or I might be in the midnight hours
doing it myself if the design the same thing with the designer if the designer just flakes out or
the designer takes too much time doing iterations or everything - the designer gives them he doesn't
like then you know I assume the risk of that so this is so this markup my markup here has to be
higher right and also it's different for every project some projects are easy to test yeah think
about testing time - if the if the interface is the same for everybody and it's just a form they
fill in it submits of the database that's easy to test if it's something where every you have five
different types of users or ten different types of users and everybody's able to customize their
user interface and make it look personalized to them then that's really hard to test or if
you have something with GPS and based on your GPS coordinates then it's going to give you
different feedback on stuff like that that's difficult to test - I mean I know you can do
all of that through the emulator and everything but you want to do some physical testing - and
and it data all adds to the cost that all adds to the risk of the project right so that's always a
consideration whereas if you go into this one you know basically they're hiring me for my time right
time and materials versus fixed price projects is a huge conversation to have right ideally you
get paid for your time and materials that way you don't assume any risk time and materials means the
risk is all on you for hiring me but the project based thing where I'm giving you a quote saying
it's going to cost this much which is pretty much the entire way that we work means that I assume
the risk of the project so and by necessity it needs to have a certain amount of markup so one
of the things I did early on the reason I bring this up is early on one of the I don't know in
the first year of doing high or no first two years doing client work I was I had so many projects on
that I wasn't able to get back to everybody and I had one client who said he was waiting for a quote
and I was like ah the developers came back with their with their quote on this and I haven't put
my on my markup and everything to it and added it to it so I said I'll tell you what I'll just
forward it on to you so I supported it on to the client said don't think don't look at the prices
because yeah but this is everything that's gonna be involved and everything and then I'll go add
the markup and so I sent it on to him which was just stupid and he looked at it and when I did
the UM when I did my final quote he says Eric your markup is huge I thought it would be like you know
eight or ten percent right but it's huge right and it was he didn't understand how much of my time
had to go into it how much risk I was assuming in the project right and in the end I told them I'll
tell you what let me put you in touch with the developers and you could work with him directly
and it was much easier on me I had far less stress on the project because you know it was him working
with the developers if they didn't understand exactly what his requirements were he had to do it
again if if you know all the questions and there's so many questions everything that's involved it's
actually you know it's not as easy as being the middleman you have to do so much thinking so many
so many meetings so many conversations so much problem-solving that and you assume all the risk
so for my fellow the app developers out there from my fellow developers at all who are doing work for
four companies or whatever or you're working in a job and you're thinking about doing work
for clients think about the risks of the project because you're assuming those and you always have
to think about you want to make sure that you have enough in your markup to manage the risks if they
come up but not so much that you price them out and they don't want to go with you as a developer
so anyway let me know what you guys think if you agree disagree with the way that I do things or
if this is useful at all because you know this is a bit is this is a bit nerdy this is a bit nerdy
even for us nerdy people so I so don't forget to Like and subscribe if you made all the way to the
end of the video. No Priya - like we're not doing the live stream tonight because I've got some
stuff to do but I do hope you guys have a great weekend. And I'll talk to you again on Monday!