Musings

What goes into pricing a project?

Following up on a previous entry on my ideal hourly rate, I found another article that talks in more detail the various factors that goes into pricing a project.

A crucial problem to accurately pricing projects is that proposals happen so early in the process, as the vendor we only have a couple of meetings, phone calls or a document to understand the project. We do our best to come up with a fair and accurate price, but it often feels like a shot in the dark.

Source: Pricing a Project | Blue Flavor

Its a good read if you often are faced with having to create proposals (as a vendor) for customer projects and have been using lots of guesswork and estimates to come up with the magic figure. 

In my work, I often break down the project into tasks and examine the resources assigned to the project to determine the complexity, experience of the person assigned to it to come up with the cost. This usually comes up to a reasonable figure that I can show the customer without hiding behind vague figures. A good formula to use would be like : task x time(complexity x effort) x rate = price (where complexity depends on resource assigned).

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