Pretty simple. Get clear specs on what is to be delivered, including testing specs as noted. Estimate the time it will take you. Bid a cost.
You take on the risk of time overruns, etc. Bid high accordingly -- enough to cover overruns of at least 10%, PLUS compensation for the risk, say another 10%. After that, it depends on how precise the specs are and how confident you are in your estimate of how long the job will take. If there is any imprecision in the specs, or you aren't confident, bid higher. And the bigger the job, the more uncertainties.
It's just one more risk to build into what you charge. When you decide to be a contractor instead of an employee, risk is part of the game anyway, and you are paid extra for the risk of not being a permie. If someone is afraid of this risk, I'd wonder why they want to be a contractor. But if someone doesn't CHARGE for taking on the risk, I'd say he's not much of a businessman. Any client who wants you to absorb the risk should expect to pay for that.
Also, watch your cash flow. If it is a four week job, bid it at five weeks to protect you from overruns. If it really does take five weeks, you break even and all is good, right? But will you run out out of cash before you get paid? You are probably only paid when the job is completed. If this is a problem, perhaps you can schedule an intermediate deliverable, specific targets which, when achieved, allow you to invoice half or a third of the cost.
You take on the risk of time overruns, etc. Bid high accordingly -- enough to cover overruns of at least 10%, PLUS compensation for the risk, say another 10%. After that, it depends on how precise the specs are and how confident you are in your estimate of how long the job will take. If there is any imprecision in the specs, or you aren't confident, bid higher. And the bigger the job, the more uncertainties.
It's just one more risk to build into what you charge. When you decide to be a contractor instead of an employee, risk is part of the game anyway, and you are paid extra for the risk of not being a permie. If someone is afraid of this risk, I'd wonder why they want to be a contractor. But if someone doesn't CHARGE for taking on the risk, I'd say he's not much of a businessman. Any client who wants you to absorb the risk should expect to pay for that.
Also, watch your cash flow. If it is a four week job, bid it at five weeks to protect you from overruns. If it really does take five weeks, you break even and all is good, right? But will you run out out of cash before you get paid? You are probably only paid when the job is completed. If this is a problem, perhaps you can schedule an intermediate deliverable, specific targets which, when achieved, allow you to invoice half or a third of the cost.
Comment