Wolves in sleek clothing: Part 2
Let’s continue our series about understanding how to vet the quality of the developers and agencies you’re investigating for your next big project. (Check out Part 1 here if you missed it.)
Tip #2: Low prices can be a red flag
If you’re trying to solve a $5,000 problem; a $50,000 solution is outrageous. That’s obvious though. What’s not obvious, however, is that a $500 solution is equally as bad!
The $50,000 solution indicates a mismatch between the pain of the problem and the quality of the solution; using a flamethrower to kill a house fly.
However, the $500 solution indicates a complete misunderstanding of the problem domain. You can be sure a solution pitched in this ballpark will not solve your needs.
The $50,000 quote likely means the agency/developer fully understands the effort needed and is pitching a robust solution. This doesn’t mean it is the correct solution. Indeed, explore solutions closer to the $5,000 pain point. But, the $500 quote means the person quoting either has no grasp of the difficulty of the problem or severely underestimates their ability. Neither are great indicators and you won’t know which is which until you’re 3 months past your deadline. (And if they’re billing hourly then it’s even worse because you’ve also blown your budget out of the water!)
🔑 Key Takeaways
A fixed quote of 10-20% of the value of your problem is a great starting point for consideration. Reasonable quotes can exist outside of this range, but that requires special circumstances to qualify.
Under-quoting implies a skill or understanding gap. Either one will usually lead to a failed project that doesn’t deliver.
Over-quoting implies an overestimation of the value of the project. In some cases, you can use your understanding of the project’s value to negotiate the quote down.