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I'm a web developer (Ruby on Rails) and I got an inquiry about the bug-support contract for a limited time (2 months). I'm very well familiar with the project so doing the actual work is not a problem and I can provide good value to the customer here.

The setup is: if there's a bug in the web app, I should start working on in the next business day. The thing that kinda worries me: the number of bugs could be really low (like 1,2 or even 0 per week) but I'm still committed to the contract and basically "on hold".

What is the best way to form the pricing for this? How do I charge for the commitment to this contract and still not overcharge? Are there any heuristics for these kinds of contracts?

I usually work full time (30+ hours a week) and charge hourly.

Here's some ideas I have (I'm not sure if the below numbers are too much or too little or just ok):

  • charge fixed cost of 25% x full time monthly price, and then charge regular hourly rate if there's any actual work or
  • charge 1.5 x hourly rate with 10hrs/week minimum or
  • charge 2 x hourly rate with 5hrs/week minimum
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You're getting the right idea, never offer your "on-hold" status for free, especially if you're expected to work on bugs within one business day of being contacts.

Although I only did one of these agreements once before (for a server setup, on a year-long contract), it was easy to choose a percentage of my total working time for the month, and charge that no matter what. This would keep me on my toes, at least. I used 15%, as I was not expecting many issues once I got in there.

Once I started the actual work, I would round the cost of the hours work up to my regular work wage. Essentially, the "on call" part was free money to be available during my business hours. Do not allow them to call you at 3 in the morning to start working on a bug fix the next day. Set the hours in your contract of how and when you are to be contacts for bugs.

Finally, once the contract is signed, make sure you collect the first month's payment in advance, and every month after that. This way, if clients get cold feet, you at least have the money from that month. You'll need to track your hours, and the client will need to acknowledge that you need paid for your time working, and not working.

If the client chooses not to pay while you are working, then remind them they are paying for the service of you being available within a business day to address their issue. If they are still not wanting to pay you to be on hold, then you'll need to estimate, for yourself, how much time you'll likely spend on the project. Always add a buffer, as you can always plan better that way.

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My 2 cents:

  • Standby price: 10% of Monthly Full time

  • Bugs:

    • High priority: 2 x hourly price
    • Normal priority : 1 x hourly price
    • Low priority : 0.75 x hourly price

The reason I use this model is because I'm a tech freelancer, and it is common for clients to expect support during after office hours (It's worse with overseas clients). I set their expectations on deliverables/services so they fit in to my schedule snuggly (since I've lost many clients due to non-availability, or sometimes I was working on a "high priority - low cost" project which would mean I would lose other important regular clients).

I've learn the hard way that better management of my time, fixing appropriate costs where needed, and being available and consistent is very important.

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