Gone are the days of off-the-shelf website packages. We’ve certainly been there, and it made writing quotes incredibly easy. But as we’ve changed over the years and expanded our offering from static sites to wider reaching digital products, the way we approach pricing has changed too.
In this piece, we’re going to explore pricing software projects, and why everything we do is now bespoke. We’ll also talk about why it takes a little more love and care to price a project, and the price ranges that you can expect particular projects to fall into. Why? Because we believe in transparency and consistency when it comes to working with our clients.
Simpler times
When we started as an agency, we were predominantly delivering WordPress websites. This made it easy to arrive at a ‘packaged’ cost. Most of the sites that we were building were of a similar size (we called them ‘brochure sites’) and they required a similar amount of work to design and develop, give or take. For the most part, our pricing method served us well, and it was only when projects started to go awry that we started to shift our thinking.
It seems obvious now, but a fixed cost doesn’t account for variables or delays. Perhaps an additional component or plugin is required, or maybe there are unforeseen issues unearthed during the QA process. It doesn’t always feel right to go back to the client, cap in hand. They generally don’t like that and we understand why; many of our clients were startups or SMEs who didn’t have big marketing budgets.
Value-based pricing
Last year, Keiron wrote about our shift to ‘value-based pricing’. In an email to a client, he explained our reasoning and this still serves as a clear and concise quote to cover our rationale.
“It’s a more accurate reflection of our experience, and offers greater benefit to our clients. For example, a change may take us 15 minutes to action, but it took us 20 years’ experience to get up to that speed. If it saves the client 30 hours a quarter, that is where the value is.”
Value-based pricing is becoming increasingly popular in the technology and creative industries. A good, tangible example is logo design. Did the BBC rebrand actually cost £5.1m in tools and materials + hours? Absolutely not. But what it did require was a consultation and research period in which teams spent time understanding the identity and planning the extensive brand rollout. Again, these meetings would be days not weeks, but it’s the combined skillset of the design agency, the experience of the teams, and the overall value to BBC that puts such a hefty price tag on something which your Average Joe would label “three boxes with some letters in”.
There are refreshing moments of ingenuity in projects of this size. Did you know that BBC developed their own custom font family? This vastly reduced their spending on font licensing, which can cost organisations of this size hundreds of thousands of pounds a year. This ‘efficiency mindset’ is something we try to apply to everything we do. If it doesn’t exist, we could build it.
How long is a piece of string?
I’m sure I speak for all designers and engineers when I say that you’ve been on the receiving end of “How hard can it be to knock up a ________?” When you start to apply a value-based approach alongside a clear breakdown of the teams, stages and processes required in designing and developing a new digital product, only then do customers start to understand where the money is going. Discovery, prototyping, testing, building, testing again, feedback, and so on.
Today, we offer value-based pricing and a clear breakdown of each and every step in a project. This way, we are charging in a way that feels more comfortable to us, and we are giving the client a clear statement of work with no stone unturned. Having said that, even the best SoW combined with a dream client can’t foresee some of the technical or development issues that can crop up during a build.
How we approach this often depends on how quick the fix is and how much of the project is derailed as a result. In situations like this, we will endeavour to get back on track within the agreed budget, but in rare cases, we may need to implement our hourly cost if the additional work is outside of our control.
Let’s delve deeper
So you base the entire project on ‘value’?
Actually, no. We do still need to be aware of how long a project may take. We’re never going to land on an exact number, but once again, our combined experience allows us to get pretty close. This is where it’s important for Project Managers to talk with Developers and Designers before agreeing an approximation of hours.
Show me the money. What do you charge?
We promised you that we’re transparent, so here are some general ranges that should give you an understanding of what we charge.
Hook-ups £12,500
These are smaller jobs where a client requires some level of software integration. This could be getting two systems to talk to one another, or a small migration to a new platform. Perhaps it’s adding a new functionality to an existing product. Sometimes, it can be fixing issues left behind by a previous agency. That’s always fun.
Start-ups £12,500 – £31,500
In this situation, we are building the product from scratch. Likely scenarios might be improving an internal business process with the application of software. Or we are building something simple and modular such as a custom CMS or mobile application.
Speed-ups £31,500 – £62,500
This is a more common requirement from our clients past and present. Here, we deliver a full platform through a more cohesive framework. In most cases, our clients are trying to move away from slow, outdated legacy software which is hampering their business. We’ll typically deliver multiple solutions that work together. Eg: a CRM, a mobile application and an online dashboard.
Ground-ups £62,500 – £95,500
The big stuff. Enterprise-level project delivery for large organisations who need multiple digital products built from scratch. These are often delivered with an element of design work to give the various platforms a consistent brand identity. Despite their size, these projects can often be internal as well as external, and there will be many moving parts as various processes are hooked up to one another. And, of course, tested vigorously.
Shake-ups £100,000+
Big, organisational digital transformation. Multiple digital products, sometimes across different regions, scoped, designed, developed and rolled out over a longer period of time. There may even be an element of IP (intellectual property) involved, in which we work with the client to develop proprietary tech. This is a great opportunity for us to explore wider digital realms such as VR, AI or machine learning.
Additional work
As I mentioned before, we will implement an hourly rate if something falls too far out of scope for it to be considered part of the original agreement. This is rare, but also essential to recoup costs, because more often than not, it’s out of scope because it’s an unforeseen problem.
Honesty is the best policy
As you’ve probably sussed by now, we are open about pricing and we think that’s the only way to be. Financial literacy is sadly lacking in our education system, so as a nation, we have a tendency to shy away from talking about money all together.
There’s certainly a balance to be found. We won’t be putting a ratecard on our website any time soon, but we like to give our clients a clear view of what a project may cost them long before they commit to anything. This also helps us understand if a project or client is right for us. Many agencies have minimum requirements when it comes to budgets, and we’re one of them.
Next time you’re talking to an agency, pay particular attention to how they talk about pricing. Are they breaking it down hour by hour? Are they taking a value-based approach? Are they having a conversation with you, or just putting a price list in front of you? Hopefully the former and not the latter.
Let us know your thoughts on pricing, and as always, if we can help you with anything from a ‘hook-up’ to a ‘ground-up’, drop us a line.