Create Some Flexibility In Your Flat Fee Pricing, And You’re Good To Go

Roy Tomeij at web development firm 80beans doesn’t like flat fee pricing.

You made a deal with someone to build you a website. Best of all: you agreed on a flat fee! That’s great, because you know you have a fixed budget. And you’re getting everything you want, because that’s what your vendor promised you. Guess what? It’s not going to happen: your project will be more expensive than anticipated and/or will have less features. You fell for the Myth of the Flat Fee.

Tomeij contends that it’s nearly impossible to have enough up-front information from a client to make a fair estimate. He rightly suggests that projects are fluid, and that a flat fee estimate which is not fluid, will have to be revised under something he refers to as Conflict Driven Development. What he means is the addition of more features that were not originally planned for, will either need to be scrapped or additional funding will need to be brought to the table—both less than ideal options for the client in question.

Thankfully, a person on the client-side left a telling comment on Tomeij’s post.

I’ve got a long list of vendors that I have to turn into a short list of vendors. Some companies don’t turn on the lights for less than X and some others might be just as talented but not as busy, hungry for expansion, eager to add an app that does Y because they can leverage the work for other clients. When I ask for an estimate, I don’t expect it to be exact, I just want to know if we’re speaking the same language.

Exactly. A change request from the client and the resulting revisions to the estimate doesn’t have to mean conflict. The agency simply needs to make it clear from the beginning that the flat fee is actually an estimate, and should the nature of the work change mid-stream, the price will also change.

Personally, I strive to collect the pertinent data I need to put a good faith estimate together and I work hard to live by it. The other option–hourly billing–I often describe to prospective clients as an agency taxi ride. In my experience, very few clients want to feel the pressure of a running meter. After all, a ride to the airport is worth what it’s worth. Should a client want that ride in a specially equipped vehicle, or to make pit stops along the way, then the price goes up.

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