fair digital product pricing

Blueprinting your dreams: The secret to fair digital product pricing

by Maarten Jansen
How much does it cost to make an app? Or how about a redesign? An integration setup? Good questions! We obviously get these a lot from our clients. They are also the hardest questions to answer. We don’t just have a price list handy to pick from like a lunch menu. Because the truth is, pricing depends on a lot of factors. That doesn’t mean it has to be some kind of mystery. Here we’ll explain a little more about what goes into digital product pricing:

If we plan it, we can build

We often compare pricing for building software to that of building a house. Building a house involves two important people: an architect and a contractor. The architect draws up your plans based on your wants and needs and the contractor then prices all of the elements. Simple enough, right?

The thing is, a client’s idea can’t be priced. We can’t skip the architect and price a house based on a rough concept of three bedrooms, a bathroom and a kitchen. A contractor can give an estimate, but we can’t really get down to pricing until the architect takes the client’s idea and turns it into a blueprint.

Same goes for software. As brilliant as a client’s concept may be, we have to translate it into plans and specifics to give a final quote. So let’s start with the architect.

The million-dollar question

So you have a great architect who has agreed to a price upfront. What do you think the first question is he will ask you when you sit down together to plan the house of your dreams?

"What is your budget?"

Makes sense right? Yet when it comes to software development a lot of people feel surprisingly uncomfortable with this question. Some may not feel ready to commit to a budget, while others think they might get a better deal if they let the “architect” propose one themselves.

But just as with building a house, an architect needs to know what budget he has to work with. It makes all the difference to how they draw up the house: does it have high ceilings? Marble floors? With a smaller budget, choices need to be made about what is essential and what is “nice to have”. The architect knows their stuff and can help guide people through these decisions. So why does this work in construction and not when talking about software?

Doing the budget dance

We think there are two reasons: a lack of understanding and a lack of trust. A lot of people don’t get how software works, which is of course understandable. If it’s not your field of expertise it can all feel very obscure and complex. Houses are more concrete: you would probably know right away that €100,000 is too much for a bathroom, unless it has golden faucets. But when an agency estimates a mobile app for the same amount you may have no idea whether this is a lot to pay for it. So clients often compare offers to get a better feel for how things cost. This is how the awkward budget dance begins.

Of course it’s all about trust, and the fact that digital agencies are often both the architect and the contractor can make people wary. They may think you have a vested interest in “working towards” whatever their maximum budget is. Unfortunately this is not such a crazy thought: it does happen in some cases. In construction this is less of a problem because the architect gets paid the same either way and the contractor is separate and has to stick to the blueprint. So we share our maximum budget with the architect and then go shopping for the best contractor deal.

The problem is, if agencies are not working with the same blueprint, their prices are hard to compare. One agency may have priced your idea based on all the extras and luxuries, while the other is presenting a budget based on a simpler version with all the compromises. This means their budgets are probably wildly out of sync, and worse yet, perhaps neither has really captured your idea correctly. So how do we get out of this mess?

The answer: start with the architect

The answer is so simple, we don’t really get why everyone’s not doing this. At Dashdot we too are both architects and contractors. But we always take on the architect role first. We draw up plans for a fixed price based on your idea, balancing your requirements and budget. If you like the way we work and you want to take our collaboration further, great. But if you’d rather see whether there’s a better deal out there for building the product, at least everyone you get a quote from will be working from the same great set of plans.

Our advice: be wary of quotes and prices made after a single meeting with a sales guy. Get a fixed quote to draw up plans first! Then ask for quotes from development agencies based on these plans. Not only will you get more accurate and comparable quotes, you’ll also make sure they reflect your actual vision. You’ll be that much closer to making your dream a reality!

Want to know more about how we can make your concept come alive? Get in touch with us & schedule a free call to create your product roadmap!

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