Any proposal has 3 sections aka
- Terms & conditions
Normally payment terms and any change in requirements will change the final payment is part of terms and conditions section.
It is a section that is avoided in the project sign off phase but when things become slightly complicated, it is the terms & conditions that are being referred and it hits badly the business relationship.
The price section of the proposal is most discussed in the initial stages of the project and if somehow if we can price the proposal such that it becomes imminent that change in requirements costs money, most of the issues arising due to requirement changes will vanish.
Breakup Pricing Structure
Many times clients aren’t if the change in the requirement actually cost money. So the trick that I use in pricing structure is that instead of placing a price for the complete requirement, I break down the price into components so the client understands that each requirement costs money.
Example: a quote for design job, instead of quoting as $250, break up the pricing as
- $100 for 3 variations of design. Extra variation at $50 for each variation.
- $100 for converting the design into a template (PSD to HTML or PSD to WordPress).
As a general rule for my development project proposals, I like to keep each task cost of under $500 and if anything is above $500, I break it down.
You don’t need to follow the same price point but you can have your own price point to break down requirement further.
This method of pricing has many advantages and the biggest of all advantage is for clients who are on a shoe-string budget to eliminate good to have features to fit things within budget.
Other advantages being
- Clarity on what costs how much.
- Reduces the risk of being not paid out completely as client easily agrees on partial payments.
- Eliminate good to have requirements that otherwise may have been included.
- Clients become aware that more requirement means more price.
- Better estimation of complete requirement of clients as you are estimating in small parts.
- Increase in client’s confidence to work with you due to price transparency.