Help! I have my first client

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Well, that was quick. I have my first job. A long time colleague from a major broadcast company has approached me, "you know how to do this app stuff, don't you?" Long story short: I've got the go ahead to build a web app. My problem: how to I charge?

  1. I don't want to take the Mickey.
  2. Transparency
  3. I'm a LONG way from being a senior - experience wise.
  4. I know I can build what they want.

I will do it through my company - charge a fee to build, a monthly fee for servers (AWS) and a fee to upkeep the code.

So how do I structure this?

Any advice would be very appreciated.

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I don't want to take the Mickey.

You're going to have to polish that turd for me (I may still be losing the battle of confusing idioms).

Transparency

Unclear what you are referring to, so I'm 0-for-2 in terms of understanding.

I'm a LONG way from being a senior - experience wise.

Utterly and completely irrelevant when it comes to charging for services. You are charging based on the value you provide to them, not on the cost of you performing the service. The onus is on them to make sure they are not paying too much, which they can find out by doing comparison shopping, at which point your pricing may have to fall in line with what the market can bear.

I know I can build what they want.

A nice thing to have, but also irrelevant when deciding pricing. If you want a good reputation, however, you should charge for a service with the intention of delivering it.

An exercise that's handy for determining the price of a non-commoditized service (a service for which there is not a generally agreed-upon price, such as dry cleaning or mowing a lawn): Ask yourself what price your client would consider too-low, then the price your client would consider too high. What you should charge is somewhere in the middle.

So how do I structure this?

You have a lot of options, but suffice to say everything is always up for negotiation. Whatever you do, get it in a legally binding contract with penalties for late payment. Above a certain amount, getting a lawyer involved to help with the contract is rarely ill-advised.

 

Thanks Neil, as per normal, excellent advice. I'd not thought of looking at it from the viewpoint of what value does it bring them. That gives me the price.
You answered points 1 and 2 with the other points. FYI "Take the Mick" : Take advantage of the situation. I thought I'd used an international euphemism. Clearly, I need to get back on the plane and get out a bit more... Haha. And 2. I have always done well being open with my oncharging of services and i.e. in this case - what AWS will charge my company for your app.
This is old ground in a new skin for me, and it's always good to get advice

 

To address the monthly fee part, I discovered AWS DevPay earlier. It seems to let you charge a client directly for their usage of aws with your markup on top. Sounds much easier for agreeing how to charge for aws.

 

Thanks. This is great, I'll have a good look at it. I think they're looking for a turnkey solution, so it'll all have to go through my company. This is very interesting, though. For people you're helping out, it will be perfect.

 
 

If you wind up looking in to it, I'd love to hear if you did/didn't wind up using it and why!

 

Based on your article, once you learn "closing", you will get an answer for yoir questions.

The more you practice and enhance your closing skill, the more money you will get. No matter how easy, small or tough your project is.

 

Thanks Hussein, it's already sold. All I can do is screw it up by continue trying to sell it (a mistake people make a lot - not being able to recognise when the sale is done, and keeping pushing with the sell) and I'm probably not too concerned with making as much as possible out of this. Perhaps it make more sense, if you're playing a long game, to be fair and realistic. That way clients keep coming back. And that's what makes you your bread and butter....

 

Two basic pricing approaches at a really high level are:

  1. "Cost Plus" based - so you figure out what it costs you to do this stuff (including your time of course) and then use this to figure out a price that gives you a sensible profit that actually makes your business sustainable and makes it actually worth doing
  2. "Perceived Value" based - you work out the value you are adding to your client's life / business and use this as the basis for your price. For example if they are going to use your app to double their revenue this year, that's a lot of benefit!

I am certainly no expert on this stuff, but from your example I'd say maybe something sensible would be using a cost-based approach for the ongoing server costs etc, and a value-based approach for the initial project - and maybe a hybrid for any changes / maintenance etc depending on their scope.

Hope this gives food for thought - this is kind of a TL;DR version of this ConvertKit article convertkit.com/stop-worrying-about... which itself is worth a read :)

 

Thanks Dan. Yeah, I used to make records (yes, the black discs with a hole in the middle) a thousand years ago, and as a producer you'd use a combination of these methods, even back then. I guess what I was wondering is: is there and industry standard costing structure? Seems there isn't, and that's good to know.

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Jaimie Carter profile image
At 51, I'm transitioning out of 25 years in broadcast, into taking an idea and making it into a reality. Live in Sydney, Australia. Surf (badly) at Bondi. Play guitar (not too bad) and Dad.

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