How do I structure pricing for a software development project with a new client?
I have an S-Corp on the side and do work on software development. My main job (a contracting project) is ending in a few months and I started reaching out to new clients. I found a client through a colleague I had worked in the past and had an initial call with them. Up until now, I've only done hourly work (odd jobs here and there and not really a steady stream of income from my side gigs). The client reached out to me asking me the pricing structure. Here's their question:
1. Single modular project pricing
2. Hourly pricing
3. Weekly/monthly retainer
It appears that they need a formal response (and most likely a contract between the two parties in the future). I am relatively new to this and am looking for input. My questions:
1. I've heard from others that fixed-price projects should be avoided at all cost. This happens due to scope creep and vague requirements. Should I tell them I only do hourly?
2. I have no idea what a retainer is. Can someone help me with weekly/monthly retainer model?
3. They've also asked for response time/hours of availability for each one of these models. I usually do my side gigs at nights/weekends. I might be able to do some work during the day but I'd rather not commit to it as high priority things may come up at my day contract. Is it a good idea to tell them that I work only on nights/weekends? Does that come across as "professional"?
4. I understand that there's a big range for software developers. Should I bid a low hourly rate to get my foot in the door (I usually work at $100/hour with my other side gigs).
When it comes to pricing, it doesn't matter what industry you are in, check out your competitors. See what they charge and what they give for that. Not only you get an idea of the price, but you can stay competitive.
I always recommend if you are a new business, it's worth lowering your price a bit, unless customers are coming to your door for your product.
Another PRICING STRATEGY - you might give some stuff away - be it a product or a service. You can run Facebook give away, thus to also increase brand awareness, reach, engagement. In return, don't forget to ask for testimonials. So its a win-win situation :) Happy days!