This post originally appeared on the VenturePact website.
The Idea: “Hey, I am trying to build an app. It’s going to be a social network for dog owners. I have $10K. You know someone?”
2 Weeks Later
“Yo, I got a steal – I found these people who told me they’ll build the app and give me unlimited maintenance for $10K. What a deal!”
6 Months Later
“Still building the product but not paying extra even though its going way over, I’m lucky I got a deal. $10k for 6 months of work is less than $20 per hour!”
8 Months Later
“I will never outsource anything again, the doesn’t work its been 8 months.”
What went wrong?
An outsourcing decision made solely on price can result in an array of problems.
When choosing a firm to build your application, price is a component in the decision making process, but time, experience, and quality also come into the equation. Quality is hard to quantify and its hard to know whether a company is high quality based on their website.
Sometimes you’ll find a low quality company that charges $250 per hour. Sometimes you’ll find a great company that charges $40 per hour. Of course this is not the norm, but price alone does not mean that a company is amazing or terrible. Also, a service provider that is amazing for one company might not be for another.
To guide companies through the development pricing maze, we have created The VenturePact Budget Grid with three zones and three tiers representing the world’s development firms and respective pricing.
Zones vary based on each region’s cost of living, and tiers vary based on clientele, years of experience and specialty of firm.
The chart shows the minimum project size that each zone and tier would require and their approximate hourly charges. This VenturePact Budget Grid should help guide companies when deciding how much they should pay and where they should select a service provider.
Do you have questions about outsourcing or finding a development firm for your next project? Feel free to reach out to email@example.com.
Randy Rayess is the co-founder of VenturePact, a service that helps companies find and engage with vetted software development teams. He is passionate about remote work, outsourcing and software development. He previously worked in private equity at SilverLake Partners, in machine learning and in payments.