As a new entrepreneur, coming up with a revolutionary digital product idea is the hard part. You have done the work of discovering a solution to the problem that you want to solve and finding out if the marketplace has room for your product. You are now ready to pass the product on to a developer with one question in mind: how much will this cost?
No matter if you have a little money to spend or a lot, staying on budget is important. For software development agencies, it is equally as important for their clients to stay on budget. With so many unknowns at the beginning of a project, how do you know how much your product will cost and how do developers provide a complete estimate?
A tool Clear Function now implements into our proposal process, to present an estimated cost for development, is the RAQ. This stands for Range, Assumptions, and Questions. This is an easier and quicker approach that developers can use to guide the estimation process. It helps clients to think through exactly what they want and need, and presents a price range that allows for bumps along the way. After the RAQ is completed companies are able to present a more accurate proposal to the client. Let’s dive into why estimates are hard to give and how the RAQ tool can simplify the process.
Developers Hate Giving Estimates
It’s no secret that developers hate giving estimates for new projects. They are excited about the actual work they will get to do and to see the product finalized and on the market, but estimates are complicated. Clients expect estimates to be accurate and if you give an exact number at the beginning of a project, you will be held to that number.
Developers see the inner working of estimates. They realize that there is no way to know exactly what will be involved just from an initial idea. As you begin to work on a project and receive feedback from testers, your design and needed features will change. Your project could end up being less expensive or more expensive based on the wants and needs of real customers.
Preparing Estimations Can Be Costly
For both the client and the software development agency, time is money. Because most projects are billed hourly, developers always want to be billing the hours that they work. Most companies do not charge to prepare estimations, a good practice, but it can end up costing money if the client does not decide to go with the company for development.
Do developers take time off of money-making projects to prepare an estimate? This is a risky move since there is a good chance that a prospective client might reject the proposal or simply disappear when they discover the amount of time, money and effort that is involved. Using the RAQ estimation model can help get an initial estimation done quickly and efficiently – lessening the risk for both parties.
How to Use the RAQ Estimation Model
- Record all Assumptions
Clear Function’s process for new clients is to first lead them through an intro call where they broadly discuss their new idea. The next step is a longer discovery session. It is during these two phone calls where we record parts of the project, including features, the problem they are solving, and the solution they are offering. It is also where we make valuable assumptions about the project.
Assumptions for a project could include only wanting an iPhone app or a website. You are assuming the project will be managed by your team or an offshore team to save costs. Assumptions can be validated during your initial session with developers.
- Ask Questions for a Tighter Scope
Questions can be asked during two times of the estimation process. First at the beginning to qualify the project, and after you have recorded all of your assumptions.
Qualifying questions are used to identify when you want your product developed, how involved you want to be, what you want the success of your solution to look like, and even how you plan to proceed once your project has ended. Qualifying questions tend to be less unique and more straightforward that could apply to multiple projects.
Clarifying questions asked near the end of the estimation process are to solidify certain details that could raise or lower the cost. This could include asking if the product needs to integrate with any existing software or if any design or branding work has already been done. These questions tend to be more specific and should be adjusted for each product.
- Present a Price Range
Now that assumptions have been made and vital questions have been asked, it is time to talk about money. With the hard work already done, developers can fairly quickly present clients with a range of prices, both low and high. Instead of a solid 50 thousand, you might present a range of 25 to 75 thousand.
With a range, it leaves the developer and the client room to add certain features and requirements or take them away. You aren’t set at a certain price because you don’t know exactly what to expect until you begin the design. Clients will have better peace of mind knowing that the price for the development of their product will most likely fall within that range.
What to Do When Clients Say No
Spending time working on an estimation just for clients to say no can be frustrating. Thankfully, with the RAQ model, you are putting an ample amount of time and effort into price estimation without losing significant amounts of money.
If a client passes, use the estimation you prepared for them as a template for other similar products. It will guide you on assumptions and questions to ask and speed up the process even more.
What other services do you offer that should be included?
Before you present your final estimation to the client, think through the other services that your company offers. Do you offer business coaching or a maintenance plan? These services can bump up the cost but are valuable resources that clients may want and need.