One of my favorite aspects of doing this job is the proposal process. That moment of introduction where the client is feeling us out and we are doing the same. It’s sort of like the interview process with a new hire, both parties are usually amicable and share their vision of the future which usually reveals their level of understanding about the project. For us, this initial meeting and the discussions immediately after are the basis by which we develop our proposals by using the following 6 factors.

1. Are We a Match: I don’t believe in doing work for the sake of generating revenue. We want to work on projects we can get excited about. If the project isn’t exciting then it’s going to be a real drag to work on. I shouldn’t have to motivate the team to work on the project, rather the work should excite and invigorate the team to get the very best results and creativity.
2. Level of Knowledge: I always like to evaluate the level of knowledge of my client contact. Have they been through this before? Do they understand the complexity of the project and the intricacies involved? A client who “gets it” is going to be easier to work with and ultimately will make for a smoother project.
3. Respect: Coming from Philadelphia I understand the value of earning respect. However, I think it’s important that when two parties come together to work on a project that they have a healthy respect for each other. Only in an environment with mutual respect can great things happen. If we come into a meeting where it is obvious that the client feels they can get the same level of service from India at a fraction of the cost, then the project is a no-go.
4. Company Size: Let’s be honest, I’m not going to price a project for Nike the same as a project for a local start-up. Bigger companies usually translate into bigger demands; for both quality, attention and speed of service. They also translate into slower approvals due to either legal, financial or committee reviews.
5. Project Complexity: This is where the hours come in. Based on my discussions with the client, how much work is on the table? Have I properly understood what the client “thinks” they have communicate to me and do they understand what I “think” I’ve communicated to them? All the other factors are multiplied against this number to give me the total hours of the project.
6. Work Load: How busy are we in the different skillsets groups which will be required on this project? If I have a project which is technically challenging and our programmers are maxed out, then I’ll have to charge extra to accommodate the overtime and the cost of hiring more people. If I really want the project then occasionally, I’ll offer the client the option of delaying work at a discounted price.

Every project proposal is a mix of these factors. I’d love to say there is some easily duplicated algorithm of factors to get that magic final estimate but I haven’t found one which works just yet. I hope this sheds some light on how we do pricing, and I’d be interested in the factors others use in formulating their proposals.