[thelist] Fixed Cost Estimations

Lee Kowalkowski lee.kowalkowski at googlemail.com
Thu Jul 21 08:25:21 CDT 2011

On 21 July 2011 13:15, Fred Jones <fredthejonester at gmail.com> wrote:
> Anyhow, I think everyone knows about the "Cone of Uncertainty" which
> means that my estimate today, before the job begins, is up to 4x off.
> Therefore it would appear to me that if I do fixed fee, I would charge
> my hourly rate times my estimate times FOUR.

eek!  4x also means you might have estimated 4x more effort (it might
be easier to do than you expect).  So your strategy is to bill up to
16x of what it takes.  That's not competitive, competition is usually

The 4x is at the initial concept stage according to
http://www.construx.com/Page.aspx?cid=1648, it'll be reduced to about
2x if you have an approved definition of the product, 1.5x once you
have detailed requirements and 1.25x when the UI is designed.

I don't know any customers who'd expect a guaranteed quote from an
initial concept, and I personally don't undertake any work without a
definition of the product (although I can draft one for the customer
for free).  I usually insist on the customer authoring the content too
- upfront, just an initial draft, nothing contractually binding - if
they don't even do this, they're probably going to be a difficult
customer so I don't work with them (well, every time they ask about me
doing their site, I say "sure, have you done the content?").  Once
they've got their content to me, they've given a bit of forethought to
the specifics of what they want me to do for them.

What I'm saying is that when I take on business, once I'm past this
initial liaison, I'm usually ready to quote for something more
definite than something that could be out by a factor of 4.


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