I can’t help with industry

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July 28, 2011 at 12:22 pm #5035
skirge01
Moderator

    I can’t help with industry pricing, but I can tell you that Michael is right on with “everything is negotiable”.  Every software company I’ve dealt with (I work for a pretty large company) makes almost all their profit from maintenance and contracted work.  Maintenance is your support (800 numbers, 24/7 coverage, fixes*, etc.).  Contracted work is everything that you want the system to do which it doesn’t do natively.  The more you can adjust your business to work with the native application, the more you’ll save (you have NO idea!).

    Also, many companies will tell you “upgrades are included” which sounds like a great bonus, but that’s only if you keep everything completely native (no customizations).  As soon as you have those, upgrades are going to cost you big time.

    If (when) you have them do customization work, get clear, written technical specs for what they are doing and make sure you and your company STICK to what you agree to.  Any deviation from that will most certainly cost you a “change fee”.  Those specs will also be what they’ll use when you approach them with a bug.  They’ll come back with, “That wasn’t part of the design.  See?”

    A tip for negotiations:  As I said, most software companies make their profit on contracted work.  That means they have the most leeway to negotiate there, as well.  Think outside the box with negotiating.  You can negotiate on the hourly rate or on the number of hours they include.  For instance, say they come back with a price that’s $10k above what you’re looking to spend on maintenance and they won’t budge, yet you want to stick with them.  Ask them to include some hours of development (customization) work as part of that price.

    Finally, TEST, TEST, TEST, TEST, TEST!  Then, RE-TEST!  Again, once you agree that they’ve delivered what you asked for, anything else (not covered by the maintenance agreement) is going to cost you.  This includes functionality, usability, interface, reporting, formatting, etc.; in a word:  everything.  It’s pretty much like Windows.  Once you buy it, you’ve said, “This is exactly what I asked for.”  You can’t go back to MS and say something isn’t how you want it.  Anything else is now a customization in Windows.

    *Make SURE that bug fixes are included in any contract.  If they break it, they should fix it entirely for free (no hidden fees for the fix, even if it breaks a customization they did for you).