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If people tried to pay for other services like they try to pay for programming

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Re: If people tried to pay for other services like they try to pay for programming

#41
post #18

There are two angles at play that got a little mixed together in the video. The first is the hard bargain during initial negotiations (ala the CD for much less) the second (and much uglier) is the restaurant, where after the work is done the client flat refuses to pay. I'm fine with the former, you get what you pay for, the latter however, really makes me mad.

It does go both ways, though. I'm a software developer/consultant and am sympathetic to the video but lets look at from the other side. Most pro level consulting teams work open ended time and materials contracts. There's very good reasons for this, but this definitely gets abused to deliver a project that was never expected to come in on budget. It also exposes the client to the effects of bad management or other in…

>Imagine if you were buying a hamburger and they told you that because they burned the first one you're going to have to pay double.

In my experience... The client orders a hamburger. You give them a hamburger. The client really wanted a hotdog and expects you to eat the cost of the hamburger.

Not a big deal in the real world, except in this example hamburgers cost tens of thousands of dollars.

Re: If people tried to pay for other services like they try to pay for programming

#42
post #24

Earlier quoted context omitted.

It sounds to me like the creator of the video probably does fixed price bidding, at least in part. In my experience that's never a good idea or worth doing - even if you can manage it OK (extremely unlikely) you end up alienating the customer by having to be so anal about scope creep. I whole heartily agree with your summation. Fixed price just sets it off on the wrong foot in the first place. What I generally do, is…

That's pretty smart.

Well I don't know about smart, but it is practical. The problem with our profession and the reason the video while comical is not accurate. We get compared to other professionals a lot, like doctors or lawyers but the problem is unlike doctors or lawyers, each new job we do, is like performing a completely new procedure.

I mean if the doctor overruns putting your new liver in, it is by a few hours at most. The economies of scale are way out of whack to make those kind of comparisons. What other professional, in generally do is a reproduces group of processes.

Our profession is unique in the fact that while there are similarities in what we do, each new project is wholly different (if you are doing custom apps). Now we do have stuff like Wordpress that make the simple stuff cookie cutter but for the most part people are not looking for that when they hire a custom software developer. They are looking for a new and novel product. The problem is that it is one of the only professions where product development is purchased from small and unsophisticated buyers.

We really are a unique profession in which our product is still crafted and not manufactured. The problem is as a society we have gotten used to everything being manufactured so the expectation is that building software is akin to manufacturing where the reality is it is more akin to an art and just like art, their are few really talented artist to go around.

Understanding, this goes a long way to helping customers see your value without alienating them by becoming defensive. I read the horror stories about bad clients all the time and sometimes wonder if it is a lack of educating the customer. I have had maybe 2 or 3 really bad customers in my 20 years. I just don't see how luck could produce those odds. I don't think I have a secret sauce and I am sure I have turned a good deal away that would have been bad customers, I just take time to understand their needs and to explain how software development works. Usually, if someone does not feel like they are getting screwed they are pretty agreeable.

If someone comes to me and says I have 50k to build X and X looks like 40K to me, I will tell them I am not comfortable taking the gig, based on the fact if it overruns they don't have the reserve to see it through and that I do not want to leave a customer without a product at the end of 50k. They then either tell me what they can burn to, which is usually far more than needed or we both agree that they are putting their capital at risk. In which case, I try to work with them to trim features to get it to a 25k product. Double the estimate overruns are rare if one is even remotely decent at estimation.

Re: If people tried to pay for other services like they try to pay for programming

#43
post #8

Earlier quoted context omitted.

You may be rare, or haven't done much yet. I've been in software dev in some capacity for about 17 years, and have been stiffed myself a couple of times, and I've had companies I've worked for been stiffed too. In some cases it was for a lot of money, in some cases very little. If it hasn't happened yet, it probably will at some point. It's not guaranteed, but I don't think I know anyone that's been at this for more…

True, I've only been doing contract for 2 years, and it's only been hourly. Nobody's been late on the first (or any) monthly payment, so I've never had to worry about it. I'm assuming the problem is more with project-based pay? Which I'm afraid to take on (for these very reasons...)

No. Hourly can still be problematic - you're just generally out less than you might be on a milestone-based project.

Re: If people tried to pay for other services like they try to pay for programming

#44

There are two angles at play that got a little mixed together in the video. The first is the hard bargain during initial negotiations (ala the CD for much less) the second (and much uglier) is the restaurant, where after the work is done the client flat refuses to pay. I'm fine with the former, you get what you pay for, the latter however, really makes me mad.

If the latter is happening to you, you're doing it wrong.

25% retainer, equal installments of 25% at respective milestones. End of story.

Re: If people tried to pay for other services like they try to pay for programming

#45
post #24

Earlier quoted context omitted.

It sounds to me like the creator of the video probably does fixed price bidding, at least in part. In my experience that's never a good idea or worth doing - even if you can manage it OK (extremely unlikely) you end up alienating the customer by having to be so anal about scope creep. I whole heartily agree with your summation. Fixed price just sets it off on the wrong foot in the first place. What I generally do, is…

They'd have to agree that your bottom dollar rate is reasonable and that you can easily make your top dollar by spending that time elsewhere.

Sure it's about 1/3 the rate I charge, so it is reasonable for me, if they don't agree then we usually never come to a meeting of the minds. As well, I have had clients try to use it against me in negotiating my rates down, but for the few that do they either see the value of my top dollar (to somewhere in the middle) after negotiations or they find another consultant.

The reality is, I am fine with my middle rate, I expect negotiation so my mind is in the middle, if they don't negotiate, then the rest is gravy but when I go into a project, my rate reflects room to negotiate. I don't fear giving out my rock bottom rate as a tool that they can use against me based on the fact that they are receiving pressure for my time from other clientele. Having the ability to walk away from the table is the most powerful tool in ones arsenal when it comes to sitting at the negotiation table.

I believe in fairness, and I believe in making my clients comfortable with the value I provide for their dollar. I love negotiating, because it allows me to show my clients the value they are getting for their money and it allows me to make them feel like they have walked away with a deal. Both are psychologically important factors to creating happy customers.

Re: If people tried to pay for other services like they try to pay for programming

#47
post #10

Been there, had most of those (and many other similar) situations.. The worst customer experience... Once a guy called me and asked for a quote. I told I prefer hourly rate * hours worked and explained why it's better for him. He called me crazy and insisted on fixed quote, although he wasn't even sure what he exactly wants. I did fast calculation in my mind and gave him a rough quote. I was bargaining at that time a…

After years of doing contracting, I've found a general pattern where the clients that wanted to the pay the very least, tended to cause me the most headaches, cause the most scope creep, be the most anal, etc. I also found that doing fixed fee contracts were the most likely to cause both sides problems. I also found another interesting pattern where the clients who treated me with the most skepticism or paranoia ended up being the ones who themselves were the most problematic or dishonest with me. Another pattern I've seen is that whichever side throws out a dollar figure first, almost always "loses" in the negotiations (meaning, gets a deal that is less beneficial to them in terms of dollar cost/income.) General trends, not without exceptions.

Also, there's no such thing as a single standard rate. Varies by skill set, by person, by project, by time/situation, by non-monetary factors (the strategic benefits or opportunity costs of doing a deal/project, etc.) So when someone asks me what's my rate, it signals to me that they are, at least somewhat, a newbie and/or unsophisticated (even if "experienced"). Instead, you tell me what you (think you) want. I tell you whether (I think) I can provide that. We go back and forth. Then somebody (hopefully the other guy) throws out a figure. The other accepts or counter-proposes a different figure/terms. Back and forth. Then shake/sign on something. Move on. Repeat.

Re: If people tried to pay for other services like they try to pay for programming

#48
post #30
post #14

This is the difference between business-to-business versus buying consumer goods. You can't waste time negotiating with every client who buys a $50 pair of shoes from you - it's just not cost effective. So you have a fixed price for everyone. However you can (and should) negotiate with people buying $20k worth of services from you. Historically, the consumer experience is actually the exception, not b2b. Up until fai…

In many places people still haggle for most things. Even where I live (Melbourne, Australia) a very non bargaining place, some restaurant districts have bargaining cultures. If you play your cards right, you can get wine and dessert thrown in if you order the steak, site by the window before the dinner rush (makes the restaurant look full). My point is that bargaining norms aren't necessarily evolved from necessity,…

I'm living in Melbourne and I am unaware of this. Wine and dessert? Surely you must be joking.

Re: If people tried to pay for other services like they try to pay for programming

#50
You can order a filet for a fairly predictable price, it will take a fairly predictable amount of time, and it will fairly predictably make you happy.

Software, by and large, does not make people happy or do what they want nearly as reliably as steak does, and so if I were them I would be much more finicky about paying people to make it for me than I am about paying people to make me steak.

And especially, software made to order has even lower mean and even higher variance than most of the software that people use. And you don't know what you're getting until you get it, at which point the incompetent software vendor is demanding some ridiculously exorbitant sum for something it turned out you didn't want anyway.

You personally may not suck at programming, but the majority of programmers do, and so people are very justifiably unwilling to cough up the dough programmers demand.

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