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  1. #1
    Join Date
    Dec 2008
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    Colorado
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    SaaS

    I'm thinking of developing a custom application (SaaS) for one of my businesses. I've never gone down this path and I'm worried about getting in too deep, wasting a bunch of money, then ending up with an failed project (incomplete).

    Currently, I'm considering a firm to scope out the requirements. This is an industry specific firm, so they're familiar with needs, value propositions, competitors...etc. They estimated this process to take one week and quoted me $7K.

    I'm expecting that to kick out the first version, it will be about $150K...but I'm not sure and really don't have anything concrete to base that estimate on. I just talked to a friend, who was considering a custom payroll application, and once he had his project scoped out, it came in at $1mm. Now, this was also for an entirely US based team. Also, the payroll application he had quoted, was much more extensive than what I have in mind.

    Here are some immediate questions:
    1. Does anyone have experience in this area? If so, please share your experience?
    2. How do I contain development costs?
    3. How are development costs determined, if I'm outsourcing outside of the states?
    4. Should I hire a US based PM, or is it common to outsource this role as well?
    5. Am I "crazy?"


    In this scenario, it may be important to point out that I have light functional technical skills only...

  2. #2
    I currently own and run a web development company (not very big) and personally if I was you I would be finding someone local to do the work. Too often do I see a project that has been outsourced and never completed or completed poorly. Plus don't you want to keep the money locally?

    I wouldn't say you are crazy but it is definitely a tough thing to do to see all the money going into it and not knowing what will happen with it.
    Programmer, web developer and entrepreneur.

  3. #3
    Join Date
    Dec 2008
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    Colorado
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    Thanks for your insight!

    Quote Originally Posted by Nathan View Post
    Plus don't you want to keep the money locally?
    Great question! If it's a difference of saving 50K, then even by outsourcing, I'm keeping the money local. Those dollars can be used to reinvest, employ internal support (sales/admin), local PR/marketing vendor...etc. Building a sustainable business is first and foremost; I feel, I can contribute much more locally (restaurants, shopping, taxes...) if my business is solid and growing. If it's a matter of saving 5K, then I would agree that money is best kept local in this case.

  4. #4
    i'm an freelancer SEO service provider . One of my friend has as a software compnay in which this sort of applicaitons will be developed. Please , provide me the details via pm. So, that I can talk to him and arrange an conference with you.

  5. #5
    Quote Originally Posted by thoran View Post
    i'm an freelancer SEO service provider . One of my friend has as a software compnay in which this sort of applicaitons will be developed. Please , provide me the details via pm. So, that I can talk to him and arrange an conference with you.
    I don't think the OP is looking for a service right now, I believe she's trying to get some advise only.

  6. #6
    How are development costs determined, if I'm outsourcing outside of the states?

    Mostof the development companies analyze your requirements and quote you on hourly basis or project basis for strictly the requirements told by you or written in the contract. They will charge you for anything extra or after sales support.

    You should try and get the full project cost for the initial version of your application but for bug fixes or minor changes, you should make it clear that you'll pay by hour.


  7. I will highly advice you to talk to local barcamp members/entrepreneurs

    Never outsource, build in parts, build/test/go to public/build/test/go to public/build/test.. should be your cycle. Its not a bad idea to find a partner for your business who can share the cost to minimize the risk. Make sure the partner brings more to table then just money.

  8. Quote Originally Posted by Poseidon View Post
    Never outsource
    Always outsource tasks which are not within your core competencies.

    Quote Originally Posted by Poseidon View Post
    build in parts, build/test/go to public/build/test/go to public/build/test.. should be your cycle.
    Definitely!

    Quote Originally Posted by Poseidon View Post
    Its not a bad idea to find a partner for your business who can share the cost to minimize the risk. Make sure the partner brings more to table then just money.
    Partners are a huge hassle. Decision making is fastest with one leader.
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  9. #9
    Join Date
    Dec 2008
    Location
    Colorado
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    Quote Originally Posted by Will.Spencer View Post
    Partners are a huge hassle. Decision making is fastest with one leader.
    Agreed. I've "dabbled" in partnerships, and so far, I'm not inclined towards that direction. I've also known people who have had programmers "write code in their spare time"; Overall, this feedback hasn't been great. Mostly projects were slowed down considerable or they ended up forking out $ in the end, buying back shares...

  10. - know exactly what you want and how it should work, algorithmically
    - prices can vary hugely depending on where you look and more expensive doesn't always mean better.
    - try not to pay upfront, use escrow and set very clear deadlines
    - ask for more credentials, similar previous works, feedback from previous clients, free demo samples.
    - get quotes from many different providers

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