An Article

What Does a Web App Cost? It’s a Conversation, Not a Negotiation

Nick Walsh By Nick Walsh // 12.10.2020

We spend a lot of time speaking with organizations as they weigh the benefits of custom development. No matter the fit, the mutual understanding of the problem, or the fluidity of conversation, there’s always that moment where the flow grinds to an awkward halt:

What is your budget?

The scene shifts. They’re no longer at their desk; I’m no longer pacing around the office to get my steps in for the day. We’re suddenly facing off in a dusty, Old West duel, and the townsfolk are reaching for their window shutters. There’s a tension in the air: Whoever flinches and brings up a number first will lose.

The reality is much different, of course. And it smells a lot less like gun smoke.

Talking cost — especially early — is a low-stakes conversation. Just another data point. We need all of the history, circumstance, and status you can muster to start presenting options, and the software development budget is an important part of that. Approaching it like a negotiation delays the first step (and where we’ll start): Building mutual trust.

Custom Software Creates Pricing Uncertainty

Worthy of a duel-style hesitation or not, people like keeping money talk close to the vest. It stems from a pair of sources:

  • Past experiences with life’s other high-value purchases, like homes and cars. With each, there are real savings that come from a bit of quality haggling, and a salesperson actively working against our interests.
  • The variability of the end product. Unlike buying something off a shelf, custom software comes with a lot of uncertainty. How will it be built? What’s the final scope? How much work needs to be done to answer those two questions? There’s a bunch of information missing in the first few conversations.

Variability and process come together to form a truth: Software requires trust. Trust that there’s a path to resolve the project’s uncertainty. Trust that the billing procedures along the way are fair and repeatable. And most importantly, trust that when everything is said and done, you’ll get what you paid for.

Trust Falls: Vetting Firms Quickly

There’s a bit of a hitch, though. Resolving questions of what and how is a time-consuming service (usually called something like Discovery), and happens as part of a paid engagement. That gives trust-building a pretty small window of time during the agency selection process. It can all feel very “hey nice to meet you, now trust me,” especially with the attached price tag.

Reassurance in a potential development partner takes a few forms:

  • Case studies and writing samples (welcome to our blog!) are the best place to start, as they move beyond the veneer of finished work and into the thought process behind it. You may not see a one-to-one example that matches your problem, but that’s okay — it is custom, after all. The method matters here.
  • Review which organizations, meetups, and initiatives the company and its members take part in. Responsibilities taken on or granted as a volunteer offer a lot of insight beyond the cloud of former client logos.
  • Find out where former employees wind up and how they continue to engage with the agency in question. Treatment of alumni — or lack thereof — generally mirrors that of clients.
  • When all else fails, plenty of folks still subscribe to the business lunch ideal to get the measure of someone.

It’s a stressful exercise, but there may be some relief in knowing that it’s a two-way street. Trust is also being evaluated on the other side of the table:

  • Referrals and follow-on work are the lifeblood of consultancies, especially small ones. Project success is always tied at least partially to cost, and playing cloak-and-dagger with price is an easy way to lose future work.
  • Most of the agency owners I’ve talked to (myself included) started as designers or developers, not salespeople. We’re fighting the urge to do all the work after one conversation, not stuffing hidden line items into an estimate.
  • There’s always something that can be built for any budget, but whether or not that something meets the need is a larger discussion.

The biggest takeaway is that the cost conversation isn’t a zero-sum game. Developers need happy clients and quality deliveries to stay busy, and pricing too high achieves neither.

Going too low is just as dangerous. It’s a knock against belief in future estimates, and feels worse for the organization. Like a call from a mechanic while your car is in pieces, letting you know there’s a handful of new (expensive and urgent) problems.

Guide Rails for Pricing Custom Software

Once that trust has been established, we’re still left with the problem of variability. To sort out the what and the how, we need to set a few more parameters:

  • With some introspection, pick the right means of measuring payment. For some, that’s working towards a total project budget; for others, it means setting an appropriate, recurring burn rate.
  • Application development is only one facet of being a technology company. Ensure that funds are allocated for things like maintenance, marketing, hosting, and support.
  • Be open about upcoming dates and opportunities. Is there a trade show, event, or investment presentation coming up that could help prioritize work?
  • Where there’s too much uncertainty, consider breaking the objective into smaller units. We’d rather use a portion of the budget to research, define, and document a solution than try to guess at the unknown.

Getting the most out of your software spend requires two-way communication throughout. It’s why so many agency sites lean hard on the word partner — they want active, ongoing insight into your world to help make the right decisions.

Regular Cost Reassurance for Development Efforts

Even as the project particulars are worked out, the conversation doesn’t end. Here are a few tips for managing the implementation portion of the process:

  • While invoicing may not happen at the same rate, make sure budget reports are happening on a weekly (or better) interval. The burn rate for a software project can be quite high, and irregular updates don’t leave any room for corrections. Extra points if everyone can access it readily.
  • Similarly, look for an agency that’s comfortable with communicating those cost updates. Surprises and new requests will absolutely be a thing during a phase of work, and it’s vital that concerns are raised before there’s budgetary impact. There are way, way fewer options to deal with line item overruns after they happens.
  • If bits of agile methodology are part of the process, make sure the whole picture is being looked at regularly. It’s easy to focus on the sprint and lose sight of the project, skewing priorities and allocations.

Signed contracts are a signal to increase communication, not slow it down. Ensure that discussions around status are part of the normal project cadence.

Sorting Out Software Cost

Like a doctor talking through symptoms to create a treatment plan, conversations around application budgets are normal, routine, and necessary.

It’s similar to the stack of NDAs we’ve signed in the name of idea secrecy. We understand the concern and are happy to mitigate it, but we deal in sensitive information so often that it’s already part of the process.

Withholding a budget slows down an agency’s capacity to consult on fit: What solutions may fit, and whether or not they’re the right fit to take on the project. Vendor selection is already a tough ordeal, and immediate disqualifiers should be discussed as early as possible. Having an open and honest conversation about your budget early on benefits both parties and sets guidelines and expectations for everyone.

Next Up

What Can Fields Like Epidemiology Teach Us About Building Ethical Social Applications?

Nick Walsh By Nick Walsh // 11.20.2020

Ethical tech companies are looking to other industries and fields of study to drive their social application creation. Discover a responsible way forward.