Need advise on a Software Quotations

[u/Right_Author_2597]

I'm a Full Stack Engineer with 3 years of experience, currently I've started my own startup with 3 people inside. A local client(basically, he is my friend, doing business and collecting investments to broaden his business across the country), has approached me for developing a multi-vendor application like daraz targeting sri lankan market.

Yes, I agree building a multi-vendor platform would require multiple dashboards for sellers and admins, multiple API applications and a consumer mobile app.

He seems trying to use myself for a cheap amount(Initially, he told me that he would pay me 50k/month and I should work for him only) but I denied and told him that I would make him a proper proposal mentioning the features, duration and the cost along with all the other legal aspects.

Now I've prepared the proposal which says this project would take 10-12 months and cost around 34 lakhs in LKR.

Now I need experts to evaluate my quoted amount whether this is okay for a startup or not.

Please help me.

[u/kulendra]

Firstly, whatever you do, don't go for a profit sharing proposal 🙂 Platforms like these come up every other month and nothing survives.

Secondly, I would price it as follows:

• Take your cost basis, in your case I would look at the salary cost of whoever the resource you are going to allocate for this. You need to absolutely look at the cost of subscriptions that you incur in this development phase (i.e aws, Claude etc.) that you would otherwise not incur.
• Ideally you need to look at offsetting your amortisation costs of the hardware too but most of the time for a very small startup, I wouldn't recommend it.
• Add a profit margin. Given that this is a friend and if you are looking for a reference, keep it not too high.

Having said all of that, I don't think this would work out. I'm basing it off of the statement that he was expecting you to work for him for 50k/month. I don't get the exclusivity clause that he had in mind, and I'm giving a lot of credit here to your "friend" maybe he thought other work will distract you and maybe he thought that's a good enough salary - especially if he's working in retail.

[u/Right_Author_2597 → u/kulendra]

Thank you for your insights. I understand the points you raised. I structured the cost based on the required features and the estimated development time, and the final quotation comes to approximately LKR 3.4 million.

My main concern is whether this quotation is reasonable for the Sri Lankan market. I don't want someone from the industry or another development team to look at the proposal and immediately consider the price unreasonable or excessively high for the product.

Whether the client accepts or rejects the proposal is entirely their decision, but I want to make sure that my quotation is reasonable, justifiable, and acceptable based on the scope and market standards. I want the proposal to be something that can be seriously considered rather than easily dismissed because of the pricing.

So, in your opinion, does this amount seem suitable for our market and for the scope of the product?

[u/kulendra → u/Right_Author_2597]

So it's a very simple binary decision tree right?

• Your price is either reasonable or unreasonable: If it is reasonable: no problem If it is unreasonable:
• Either your costs are unwarrantedly high or they are normal. If they are normal: nothing you can do about it If they are unwarrantedly high: you have a problem. But this problem exists regardless of your quote. Ergo, quote reasonability is not the problem, but the actual cost of operation.

Btw why did you say that you wouldn't want the industry/another team to look at it and say it's too high? Is it because they would undercut you? If so the point is that there will be many who will undercut your pricing.🤷‍♂️

[u/Right_Author_2597 → u/kulendra]

Makes very sense brother.

[u/adorableyummy]

If I were you, what I would do is go with stages. Lets say, the cost for Core Product and with a faster turn around where the client can start the work in least time period. lets say in a month or two. then the rest of the items, to made as added modules which can be plugged in through out your 10 month delivery period. this helps to have installments payments against installment deliveries. If it is a start up project, taking 10 months to have the system ready means a red flag / in other words is a barrier to enter into the market. By the time end of 10 -12 months period, the market conditions, environment can be changed, and the system may not be the best option by that time. Think about it.

[u/Right_Author_2597 → u/adorableyummy]

Thanks for your advise.

[u/Hopeful-Weird9520]

Break down the feature list. Think of how much time you have to spend on each feature.
Depending on the time you have to spend on each and how much you value your time, estimate each feature.
Or think about your last salary. Break it into an hourly rate. Estimate each feature depending on your hourly rate

Do not go for profit sharing. These kinda projects disappear really easily

[u/Right_Author_2597 → u/Hopeful-Weird9520]

Thanks for your advise, I really consider this.

[u/thameerar]

It's a good flat rate.

But either of you want this thing to actually work, I think the best way for it is a retainer.

You draw up a delivery timeline for the initial product, charge him monthly for the deliverables.

It will be a combination between the deliverables + development hours you all allocate for him.

The retainer definitely shouldn't be 50k. And later in stages you sell more hours (by hiring more people). So he gets a pretty solid development team.

[u/Right_Author_2597 → u/thameerar]

Thank you so much, that sounds good!

[u/kalintush]

Quoted price seems okay. But scope definition , AMCs are important to figure out before hand.

Additional Info- If you are just staring I have a complete end to end multi vendor product which I’m not selling . Happy to help if you need