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Why do the IT project quotations vary so much?

Why do the IT project quotations vary so much? - Develtio

If you ever had to commission building a website (or basically any other IT-related job), chances are you’ve already seen a significant discrepancy in price calculations between contractors. The differences can be mind-boggling at times – how come the estimate for the same job is twice or thrice bigger? Is the cheaper software house cutting corners? Or is the expensive one looking for an easy score? Unfortunately, there are no easy answers here. Besides, to get some of them, you will need to ask yourself some questions. Sounds intriguing? Read on to learn why the IT project quotations differ so much.

It’s All in the Brief

There isn’t a single more important aspect of setting up a new project than creating a detailed brief. This document will be referred to at every stage of the product development cycle. Half-baked, incomplete briefs can negatively affect the project from the onset. Unclear business requirements, lack of technical specification, missing essential functionalities, hazy design vision – the longer the list is, the more startling the final calculation may be.

With a well-thought-out and detailed brief on the table, the dev and sales teams are able to estimate the resources and amount of work needed accurately. The project can be fully appraised upfront, and a Fixed Price can be offered. It will be higher than the potential Time and Material first quotation, but the final cost is usually comparable. If you don’t like surprises, make sure your brief is rock-solid – it’s as simple as that.

Fast, Cheap, or Good? Pick Two

Behold the Iron Triangle of project management. The “fast, cheap, or good” conundrum must never be ignored when discussing price calculations. Do you need a simple WordPress website and want it cheap? You’ll easily find a dev team that will whip up a nice-looking website for you with pre-made templates and plugins. It will be quick and cheap, but undoubtedly not good. A website developed from scratch and with the use of Headless CMS performs much better and is more secure. But it definitely won’t be cheap, especially if you need it fast.
At Develtio, we don’t go for cheap and fast – we can work with strict budgets, but only when we’re confident we can deliver a product in line with our standards. And that usually takes time.

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The Price Is Right. Or Is It Not?

Outside of brief briefs and trite triangles, several other factors may cause a significant discrepancy in project quotations. These are limited to specific scenarios, though, and won’t always need to be considered:

Third-party integrations

When your website needs a specific functionality (e.g., a booking module), you can either have it developed from nothing or use existing solutions available in the form of Software as a Service (SaaS). The custom-made solution will inevitably cost you more upfront, but… you save on the SaaS subscription fee paid every month. In the long run, building the module from scratch may turn out to be a more cost-effective option.

Outsourcing

No software house keeps all its developers on the payroll. When a project goes beyond the scope of the company’s core technology stack, a number of specialists must be outsourced. Hiring experienced freelancers is usually a costly affair, noticeably affecting the project’s estimated price. That’s why two different software houses can come up with very different quotations for the very same task.

Specialization

Seasoned development companies are well aware of their core stack’s drawbacks and limitations. They would know if the task at hand isn’t as easy as it seems and requires more time and effort. On the upside, highly specialized teams need fewer hours to get the job done, which will indeed be reflected in the final bill. Also, different technologies can be used to achieve the same result, and not all technologies are equal. At least not in terms of pricing.

Cutting corners

Remember the Fast, Cheap, or Good triangle? Some companies don’t believe that. Instead, they’d go with unrealistically quoted projects while promising the full value to clients. Effectively, to deliver any tangible results, corners must and will be cut. Rushed deployments, sloppy code, or lack of repositories – the list goes on and on. And if the quotation looks too good to be true, it probably is.

The Devil’s in the Details

Finding a software house that will give you a reasonable estimate AND deliver on its promises can be tricky. For example, did you know that at Develtio, you don’t need to pay for the project’s discovery phase? Our experts will discuss potential features and brainstorm with you at no additional cost. It’s not a common practice in the industry, though we believe it should be.
Project quotations will always differ, sometimes significantly, and that’s just the nature of the free market. It’s just worth remembering that the sheer numbers don’t tell the whole truth about the offer’s actual value.

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Błażej Dziuk
PROJECT ANALYST