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I had a client come in the other day and he presented his app idea. It is kind of a "Doordash" app where people choose a store, they buy things, and get notified of when they can pick it up. As you can see, all they need is the app... no staff, no employees. I was asked to do the development of this three things:

  • Client facing application (iOS/Android Hybrid)
  • Store facing application (Web)
  • Admin facing application (Web)

I've never had a client that uses one of the applications I develop for direct profits. I am used to charging a fixed price for each project, but now that this person is using only my tool to make bank, I feel confused on what to charge. What I am saying is.. I could do this app for myself, put it online, and get some stores onboard.

I was thinking if (besides a fixed development price) I should charge him a % of the sales that are done through the app. Second option would be, charging him as an outsourced project for a fixed monthly price, or finally, Just charge the development and that's it.

What pricing model would you choose and why?

Kind Regards, Alex.

  • Why reinvent the wheel? There are many marketplaces out there for this exact purpose, and trying to design one from scratch seems quite silly to me, money wise... – Canadian Luke REINSTATE MONICA May 26 '16 at 20:08
  • @CanadianLuke I agree, however I wasn't contacted to decide if their business was going to succeed or not, they just want me to make their apps. My question here is how to charge this type of projects where what I develop, is the direct source of income for a company. – Alejandro Cavazos May 26 '16 at 20:14
  • Just a suggestion... a custom market app should be a costly thing if they aren't willing or interested to use existing avenues. (This is PURELY opinion... hence a comment) Find the "marketplace" apps out there.. study their pricing as if you wanted to purchase them... then add a multiplier of 10x along with any costs for development. Basically charge for your development time in creating the app then charge an additional 10 times what any marketplace app would charge them. – Scott May 26 '16 at 23:25
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Are you going out to stores and recruiting them? Are you investing your own money in servers, advertisement, brand design?

If no, then you are not "making the whole business".

That said, it's perfectly reasonable to ask for royalties in such a case. But the reason they're probably coming to you is because you might offer a fixed price. Similar platforms likely operate on a SAAS basis, and it sounds like his company will work that way too. And they think it's worth the investment upfront to not have to pay the monthly fees.

I suggest having a talk with the client and asking what the future plans are, how they're planning to do support, if they have a hosting solution. That'll give you some insight in to what their businessplan is, and it may give you the chance to offer an all-in maintenance package, so you have a longer income tail.

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In my opinion, you are not calculating the risk of failure if the 'DoorDash' like app doesn't work out. If some one else is ready to take it up, then it's better to find other ways of getting money than to spend months creating it, taking the hard decisions and running it. You can't be a freelancer and let business failure take over you.

Give credit to the person who came up with this idea first. It's more of his intellectual property and it doesn't sound good to steal and implement it.

What are the other ways to earn through the project:
1. Like you have mentioned, post launch of the business, demand certain percentage in sales.
2. Reduce your free maintenance support period (If any).
3. Offer to deliver the project to the actual market price for development but demand a constant maintenance payout every month post free maintenance period. This is exclusive of the money you get as sales commission and major maintenance charges; if any.

If you ask me, as a freelancer, constant pay every month for a project I worked on 6 months before is the most satisfying thing. It also makes you financially stable.

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