I have been building software for many years. My first project in college was a Video Billing System built in visual basic. The machines then breathed more heavily than I do. Once done with college I braved the nairobi streets in search of clients, fate had it that my very first client was based on Westlands and had been running a video library for many years.
I walked in introduced myself and was given a chance to present, I had not learnt to pick up things like expanding pupils, faster breathing when a client is interested in a project. Once I had demo the system, I sat back in a chair, all this happened in the video library, and the client then went to the question, “how much?” , I straightened my shirt and said KES 90,000.
It the early 90s and clone desktops are all over the place, most cost around 60-120,000 , the client comes back and says, “you want to sell me a software, that costs more than the computer?”, I didn’t have a long discussion and mumbled, “format your machine and see what the 60,000 computer does for you.”
It has taken me many years to reflect on this transaction and its failure, I had always as a young developer though the issue was not picking the reactions and straightening my shirt. Experience over the last 20 or so years has taught me :
1) The 90s were full of clients who did not understand the value of software
2) As a developer I did not understand the value and cost of my own creation
3) Client sometimes say rough things to test out your mettle, the younger you are the more this happens
I went through the 2000s billing for my work hourly, this is what everyone said was the norm, close your eyes , look at how long you have been doing this and get an hourly rate , 1500, 3000, 10,000 then always bill based on the number of hours.
I also at this point met two very talented designers, same years of experience, one would churn out logos like a birthing rabbit, pop, pop, pop one after another, very good logos. The other took 10 months to do logos. You can imagine one went on to bill KES 2500 for just the logo. The other did logos for 500,000. This baffled me a lot and for almost 3 years, I explained it through the “nepotism and corruption in our society”.
Around 2010s, I came some new answers through YouTube Videos:
Changed how I thought about billing, completely, beautifully and simply. When a client comes to you for help, stop selling, Listen to what they want and understand where their problems are.
start with why ? we build medical software but what issues do you have? what do you want to achieve with a medical software?
speak less , ask more questions
Then you need to determine budgets they are looking at, how expensive is it for them to run their business as is, what could be the cost saving, what are all these numbers based on their revenue. What are their revenue models, this is key as it gives you an insight to what they would be willing to pay for the problem.
Today, if a client cant discuss some of the above numbers, I would take the work, one, I have now way to price it, two, a business that is coming to build software without having thought of what that software will do for it , in terms of savings, efficiency and its potential cost, is a “even me, I want a software” business. These projects never end well, the client will have no will to pay , because it is not linked to any overall strategy in their business.
Once, you have these numbers , you can structure a billing that does say 10% to 30% the overall values and use this to structure your monthly or project costs.
I still do charge the occasional KES 30,000 for WordPress website but for custom solutions , I always try and rely on the above, even where its a start-up that has never done revenues, they have thought about some costs and you can use this to refine your numbers for them.
My agency days of billing hourly, rate cards or reacting to “its a copy and paste.” are long behind me. It was just a phenomenon , I had to go through.