I've been self employed providing data collection/analysis services for two years and landed my biggest client, a bank, about two months ago.
I agreed to collect, clean and tag 10,000 (public domain) mortgage contracts that would basically give them a map of every loan that's been issued for every commercial building in their tri-county region for the last 10 years. Said bank will use this data to reach out to business owners who's loans are coming up for refinancing (loans from other banks) so they could get the business to refinance with them. If my client signs on 10 - 20 new loans in the next 5 years using my database they could easily make an additional $1,000,000 in revenue in the next 10 - 15 years.
I thought I could get the job done in a month so I asked for 2 months. They agreed but decided last minute they only wanted to pay once the job was completed. I agreed to this (mistake No 1?). One strange thing is that I never signed an NDA.
As of today I'm three weeks behind on my original delivery date (of which they seem okay with). I'm almost done but I've realized I've sold myself really short because by the time I'm done/paid the amount of unanticipated extra work I had to do is going to dilute my effective hourly rate to a fifth my market value (since I also racked up out of pocket costs for additional labor).
Short of my written agreement with said client I literally owe them nothing. Since I don't get paid until I give them the database there's nothing really forcing me to stick to the (unfair) agreement I naively made (except morals). What's more I now have a list of at least 30 other banks I could potentially sell this data to.
Is it in bad taste to try to renegotiate for higher compensation? Do I risk loosing their trust in my business as one that "keeps its word" if I do that? What should I do?
I decided to resist renegotiating any prior terms and stayed true to my original agreement. I felt this was the right thing to do. I've learned a lot from this experience:
- Resist the temptation to use fixed price contracts for work you've never done before. Such instruments are better suited to familiar tasks you've actually done before where the costs are already known.
- Focus on and deliver the lowest hanging fruit first. One of the reasons costs ran away from me on this project was because I was being a perfectionist and wanted to give my client the absolute best product I could. That's a nice goal but perfectionism is costly and sometimes (often?) is down right infeasible (as was my case). Turns out I could have finished this project 4 weeks earlier as the client was satisfied with the "imperfect" (by my standards) product.
- It's better to reach out for guidance/help from your support community (be that SO, your friends, family) regularly and as you face challenge. I wish I had consulted a trusted friend about this problem sooner as that would've given me a fresh, calm person's perspective on the problem.
I hope my documented experience here is useful for someone.