[ale] OT: pricing structures for contracting

[Christopher Bergeron]

I just submitted a proposal for a "prototype" and the terms were the 
same as Fulton's.  50% up front, and 50% upon completion.  Typically, 
they (the client) will milk you for what they can for that first 50% 
(project predictions, suppliers [ don't give up your supplier ], goals, 
etc).  Give them something that they can sleep soundly with (but don't 
give up your trump card) for about 50%.  Upon project completion, grab 
the remaining 50% and call it done.  I think the "great equalizer" here 
is the fact that they give you the money up front; but you have to count 
on them giving you the remaining funds upon completion of the project. 
 So, in essence, you have as much to lose as they do if the project is 
not done to a satisfactory level.  

Initially, they put their trust in you and give you 50% of the "project 
cost" in good faith (reputation [see my last email about ethics and how 
they help you], skills, etc). Now, granted, you can walk away from the 
deal with half the cash, but after completing the project (and doing 
[essentially] 100% of the work) you have to hope that they keep their 
word and pay you the remaining 50%.  So ultimately, it would be a draw; 
but you get to walk away from the project with a good client (assuming 
your work product was good) and a reference.

Keep in mind that you have just as much to lose as they do and the 
"trust" line is a very narrow, but necessary road to travel.

As such, 50-50 has always been my experience...  depending on the 
financials, and what you're going to provide up front, your mileage may 
vary...

Hope This Helps,
CB






Fulton Green wrote:

>The last project I did (website redesign) was 50% up-front and 50% at
>delivery (which was understood to mean successful implementation).
>
>I don't think it's out of the ordinary to ask for some up-front costs, but
>be prepared to give them something tangible, such as a requirements spec (if
>they didn't provide you w/it) as well as a design roadmap.  That way, your
>client can have something to reuse should something go wrong between the
>start of project and initial delivery (insert scenario involving you and a
>wayward mass transportation vehicle here).  Depending on your potential take
>from the project, you could also come up with multiple milestones /
>deliverables with corresponding monetary percentages.
>
>The really ambitious would also add in per-day penalties, but that's
>advisable only if the client presents you with hard deadlines ahead of time.
>If that's the case, you should be able to pad your final price a bit as
>insurance for the unknown variables that could affect your project delivery
>schedule and/or critical path.
>
>Wait <slap/>, I'm sounding like a project mananger.  Must stop writing.
>
>HTH
>
>On Fri, Dec 27, 2002 at 10:56:30PM -0500, John Wells wrote:
>  
>
>>I'm in negotiations for a project and wondering what common pricing
>>structures are.  I'd like to request say 20% up-front, %50 at delivery,
>>and %30 after successful implementation.
>>
>>What is common practice when it comes to these matters?  Am I out of my
>>mind for asking for up-front pay?
>>    
>>
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