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Staying Viable in the Software Design Business: A Case for Deterrence
Posted 8 months ago on 11/12/2020
Take Away:

This article discusses how I created a new contract for running my custom software design business after encountering too many problems with the prior way I was transacting business.


For years I have always approached the design of software projects with fixed price contracts. I have used this type of contract since 1994. Frankly, it has always been a “hit or miss outcome” with these set price contracts. Sometimes I found nice customers to work for, while other times I wound up with undesirable people.

During most of the 1990s, I did not have too much trouble with finding good application development customers. Beginning in 1999 and 2000, this began to change. When I fell in with someone bad, they tended to be even worse than the bad customers were in the 1990s. This trend repeated itself during the next several years and the bad customers seemed to get into my business more and more. In 2013 I began doing some programming work for someone who seemed nice at first. Before long, this person began to take advantage of me and I quickly put a stop to it. Next, I was receiving hostile voice mails and emails from this troublemaker. I finally went to court a while later over this and recovered about 64% of the money I was owed. To make a long story short, this debacle made me realize something. I needed a new contract for my project customer engagements.

If most of my fixed price contracts attracted people who were undesirable to work for, then that was sending me an unmistakable message. The only other option was to charge by the hour. I have tried to avoid this for years, because I knew it would make it harder to find work. But this thinking becomes irrelevant if almost all of the work I do find with fixed price contracts isn’t even economical. The problem is that fixed price contracts quite often attract people who will never pay by the hour. They tend to demand far more work than what they are paying for with regard to the face value of the contract.

Next, I began to revamp my existing contract so it would be geared for an hourly rate instead of a fixed price. I then made an appointment with my attorney to review and make any needed updates to it. The new contract states that I must be paid for every 10 to 20 accumulated hours or less than 10 accumulated hours if I have reached the end of the current software development engagement. The liability disclaimers between the old and new contracts didn’t really change that much, because they always did a fine job of protecting me from liability exposure. The real problem was offering fixed price agreements for my projects.

I have learned one thing the hard way in all my years in this business. You can’t make money unless you are first preventing the headaches that cost money. In other words, the people who cause so much of the trouble need to be deterred from ever entering my business from the outset. Don’t get me wrong - there are a lot of nice customers out there who are great to work for. There are also a lot of kooks who seem to think I owe them the bargain of the century. When one of these shysters enters the business, he or she will show absolutely no respect for me, my time, my contract limitations or anything else. The scoundrel will squeeze me for every last drop of unauthorized labor they can get out of me.

In my mind, the real purpose of a contract is to deter undesirable people from entering my business or at least to control them if they manage to get in somehow. The conditions of the contract have to be strong enough to send them away from the outset. And if one bad apple does get in, I have to be able to stop the shenanigans very quickly and get out of there with no legal strings attached. My new hourly labor rate contract should facilitate this capability. Predictability is what I really want, because that keeps the money coming in. My new hourly labor rate contract is designed to keep things on a predictable and consistent track.


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Article Contributed By NE Ohio Computer Guy:

Please visit my software developer website for more information about my services. I offer application development as well as Android app coding services. My developer skills are best suited to dealing with custom software projects. I can perform programming for Corel Paradox as well as C# and PHP.

In my local area of northeast Ohio, I can cater to computer repair and "fix my computer" issues. And don‘t forget to check out my YouTube Channel. It is full of cool videos and has something for everyone!

Use my contact web page today to reach me about any software design ideas you have.

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