I work at a library consortium and do software development for libraries there. In the last two years a colleague and I established all kinds of services around VuFind, an open source “library resource discovery portal” (or just call it “catalogue” 😉 ) software. We offer hosted installations, all kinds of individual customisations, development, coding, consulting, everything you want… Because this service is not part of our consortial base services (which are free for consortium members), we have to charge libraries. We decided for a simple pricing model: There are low, fixed prices that cover basic installation and maintenance costs. All customizations should be billed to match (real) costs/effort. The overall goal is an affordable offer for different needs.
One thing we got completely wrong in the beginning was the calculation of effort for library specific customisations. We roughly looked at the implementation complexity, estimated the time needed, added an N % “overhead surcharge” and wrote an offer (call it the “naive software developer’s pricing model”). If we were a company, we would have gone broke within weeks, because our calculations were way too low.
Why? It turned out, we spend much more effort on communication with our customers than on software implementation. But even if we adjusted the N % surcharge I mentioned above (means: became more expensive), we wouldn’t have a sufficient pricing model. Because the software implementation tasks for our customers tend to be rather trivial, while the communication effort is rather high, and more or less independent of the implementation effort. Basically, we could give away coding/implementation for free and just charge communication. Because we want to continue offering an affordable service, we are trying to change our pricing model and make communication more efficient. We have some ideas how to do that. I am looking forward to discuss them with you from your customer’s perspective. And maybe you have even better ideas for us how to establish a cost-covering, but still affordable pricing model?
Till Kinstler (Twitter)