“Transparent fixed price offer”
When it comes to custom software development, many IT service providers struggle to avoid fixed-price offers. It is also the case that the compilation of the effort does not always reveal in the clarity expected by the customer.
With regard to the method of allocation, processing is often focused on the actual expenditure – that is, time and material. This means in plain language the complete assumption of the risk by the customer.
From the point of view of the IT service provider, this is the perfect solution – with the exception of one essential aspect: meeting the customer’s planning and budget security requirements.
If you take a closer look at the topic of settlement on a fixed price basis, this will result in simple rules for the IT service provider, which will have a positive effect on risk minimization:
Regardless of the overall project size, it must be ensured that individual atomic tasks (for example: functional requirements) must not exceed a maximum amount of effort. If this is the case, the corresponding task must be split again.
The IT service provider must be given the opportunity to become familiar with the customer’s infrastructure, technologies and acting persons.
Clear communication regarding the quality of the underlying documents (specifications, etc.). If necessary, a revision must be made. If there is no agreement between the two parties, this is the right time to devote to another project.
You do not have to complicate matters as they are anyway.
In addition to the binding price, the traceability of the underlying expenses is of the highest priority for the customer.
Hand on heart, how often did you, as a decision maker, receive multiple offers for the same request and could not compare them? In addition to this, it often makes the mentioned allocation of costs impossible for individual positions to calculate the ROI.
Again, there is a simple solution: listing according to professional requirements with the respective costs. Ideally traceable by an official metric, such as the Function Point method.
If you pay attention to some behaviors and rules in addition to the required technical skill set, and if you are also considering how an offer should be designed from a customer’s perspective, then you have a good chance of winning the contract.