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Appraising your work: what's it worth?

by BMaximus (Chaplain)
on Jun 24, 2001 at 12:47 UTC ( #91047=perlmeditation: print w/ replies, xml ) Need Help??

Perl is basically for most of us our bread and butter. Merlyn writes books and also writes articles for magazines on the subject of Perl. Others like Ovid,chromatic and jcwren write software, be it in Perl or in another language. Whether it be for themselves or another company.

At the beginning of the year I was laid off. The company I was working for was bought out by the competition a few months before and I saw what was comming but I refused to pay attention to the warning signs. I think we call this denial. And so I was put back out on the market. What I didn't know was that this would leed to my introduction to freelance. I'm working on a freelance project at the moment and I'm also working on a personal one as well. The personal project is something that I'm hoping that I will be able to sell as a packaged deal. However I have no idea as to how to begin to appraise as to how much a person or company would be willing to pay for it.

So my question of the day is. How would you go about appraising what you have created? Not a future product but the finished package thats already been done. How would you price it so that its not to high and at the same time not to low so you'd be fairly compensated for your personal time and effort? If you have done this please share your experience.

I thank you for your enlightenment,
BMaximus

Curiosity has its own reason for existence.

Albert Einstein

Comment on Appraising your work: what's it worth?
Re: Appraising your work: what's it worth?
by Mission (Hermit) on Jun 24, 2001 at 16:14 UTC
    BMaximus, you will have many varied answers here, so pick and choose to your needs. If someone asked me, "How much is your code worth to you?" Some days I would answer "Millions!" and other days I would answer "Just take it." Obviously you need something in between.

    I work for a university, and I can tell you that in our IT department we spend some incredible money on software packages that we unwrap, and they pay consultants to come and fix the problems. My point is that the idea is what was sold to our administration... not necessarily the product. It was also the vendor's idea compared to their competitor's idea of how the product should work. So really it's all about your 'package presentation' to your potential customers.

    You didn't say what 'concept' you are working on (BTW: smart move on your part!), so I don't think that I can give you numbers that will mean much since I don't know that product's market. I suggest that you do a bit of research. If you know what similar products are charging, then provide a better product for the same price (to get going.) If you are the only product in the block, then you'll have to answer some questions.

    You questions are going to be:
    • Who would I sell this to?
    • What are they buying now, and for about how much?
    • Tally up all of your hours, and ask yourself, "How much is this worth to me?"
    I know you asked that question of the Monks, but really think what would you be comfortable with.

    Now for a more specific answer. I do not write Perl on the side (yet.) However, when I charge people/companies for building web sites (outside of work), I usually charge differently depending upon who it is. For example my minimum rate is $30/hr, and in the same breath I can say that I've charged $150/hr for a job that was very similar. I knew that I could get away with it since the company had just spent about $200/hr on a person who didn't do what they asked. I know it doesn't seem fair, and my examples won't match your question exactly, but hopefully I've givin you something to work with.

    If you do find a good 'formula' please post it. I know that many people have the same problem. Good luck in your freelance work!

    - Mission
    "Heck I don't know how to do it either, but do you think that's going to stop me?!!"
Re: Appraising your work: what's it worth?
by holygrail (Scribe) on Jun 24, 2001 at 16:53 UTC
    It's hard to appraise your work. Either your freelance hourprice or the price of your "packaged deal", I think the only wise thing to do is ask yourself: "what would I pay for it if someone else did the job for me?"

    Of course, if your product or service is aimed at large companies you can try to sell it for twice as much as you normally would, but that's about it.

    Another thing to keep in mind is that you have to make a living. Don't sell your services or products for too little, since you have to pay your own bills. But that's probably too obvious to mention...

    --HolyGrail
Re: Appraising your work: what's it worth?
by eejack (Hermit) on Jun 24, 2001 at 17:44 UTC
    There really isn't *one* way of pricing your work. I have seen many methods over the years, some which take your time and effort to determine a products worth, others based on market conditions and what everyone else is charging.

    What works for me is very simple. I decided how much I felt comfortable charging per hour, and use that times the number of hours I worked on something. If that number feels right I use it, otherwise I adjust it..:)

    I have taken my rate and factor it as well. Non-profit and worthy causes I either don't charge or charge half rate. Clients which wear suits I charge double or triple.

    Obviously there is a lot of ....ummm.... flexibility in my method and it is really no help at all in determining the worth of the product you are asking about.

    Just like TIMTOWTDI in what you code, the same applies for how you price. And your results will vary - no matter what some people will think you too cheap and some too expensive.

    You get to second guess yourself constantly about it, and I have seen folks give themselves ulcers worrying about what rate they should charge.

    I just accept the fact that I make what I make, I don't worry about what I didn't make and what I could have made. More importantly I accept the fact that I am not a business person, I don't think like one or care too. At the end of the day I'm happy with that.

    EEjack

Re: Appraising your work: what's it worth?
by jepri (Parson) on Jun 24, 2001 at 20:05 UTC
    All my answers to this are variations on 'know your target'. In response to the people above who say that you should get what your time is worth, I would have to say, get what your customers time is worth. Or even better, get what they think their time is worth. They may consider your product to be a lot more valuable than your own estimation. Experts sometimes don't realise their full worth, although that's not usually a problem in IT.

    By this I mean that it may have taken you months to write, but maybe it could save the customer a year of work, or perhaps they could fire someone and replace them with your product. Then it would be worth paying you much more for one license than you would have got for your time programming it at normal rates.

    Since you haven't mentioned any competing products (or their prices) your product may be unique. In that case you would have to try and hang out with your target market somehow - online or in the real world.

    Perhaps you could cut a deal with a publishing house, or a marketer who has relevent experience. A twenty percent cut sounds high but if he doubles your sales, well... you are still ahead.

    ____________________
    Jeremy
    I didn't believe in evil until I dated it.

Re: Appraising your work: what's it worth?
by footpad (Monsignor) on Jun 24, 2001 at 21:19 UTC

    Well, most of the discussion to date has been focused on hourly pricing, as opposed to fixed pricing for "shrinkwrap."

    Without more details about the product itself, it's tough to say what a fair and reasonable price would be. That said, there are some things you can do to get some help.

    Have you researched the market? Have you defined it? Who will your primary customers be? Corporate customers have deeper pockets than consumers (a fact a certain PC software maker seems to have forgotten). If your software could potentially, as jepri suggests, save a company the cost of a single employee's salary, cost, overhead, etc...then you might be able to get away with charging pretty severely for it, perhaps $20K-$100K for a server-license.

    On the other hand, if your product is a personal consumer device, then you're looking at $10-$100, depending on its function, value, and competition.

    In addition, you need to determine who your competition is. What are they selling and how much does it cost? Use that as general guidelines. Once upon a time, certain compilers sold for $500-$800. A certain company came along and sold one for $75--1/10th the cost of the one from their biggest competitor. They did well by it (until they bought the wrong company, but that's a different story.) The point being that you might consider undercutting your competitors.

    Also, consider your licensing strategy. Are you going to require licenses for each CPU? Server? User? Site? Each offers interesting variations on pricing alternatives. Again, find out other companies that are using similar schemes and what they're charging.

    Finally, keep in mind that you're probably not going to be "fairly" compensated for your personal time and effort. While some authors command good livings from their efforts, most don't. Or, as they say in acting circles: "90% of all actors are unemployed at any given time." My point being: don't bet the farm on this endeavor. It might, indeed, be the killer app that catapults you to the top of the Forbes list. Odds are, though, it won't.

    --f

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