Re: Exponential Bidding on Projects

D from BC wrote:
One could bid like this:

Days to complete job * $$$ wanted per day = Bid amount.
This is linear...

My half-baked thought is to use non-linear pricing.
The more days to do the job, the more the daily price goes up.

Come to think of it, shouldn't it be like that anyways?

Consideration 1
The longer the job, the more risk in losing other jobs due to being
booked up.

Consideration 2
Rework and surprises can pop up near the end of the job taking more
time than expected.

Consideration 3
When one borrows money, there is interest. How about when people borrow my time...maybe their should be interest
too???. Call it 'my-time' interest.
"Ah... so you want to borrow 2 weeks of my time? Well that'll be x
dollars at 25% interest compounded x'ly." :P

Consideration 4
If many things in nature are non-linear, why should my pricing use
linear functions.? That seems unnatural..

Do people sometimes bid using an exponential formula?
The more days to complete the task, the more money one makes per day?

Any formula suggestions?


D from BC
British Columbia
Canada

First, I almost never bid fixed price. Rarely do I have a prospect that is willing to spend the time to specify things well enough that I will do so.

Second, I seem to spend a fixed amount of unbillable time prior to getting an order, no matter how long the actual work seems to take. So if anything, I'll give a discount to longer-term projects.

Third, there are no "surprises". There are just poorly read or poorly written specifications, there are specifications changes, and there are schedule miscalculations. If I can't read a specification that's my fault. If I can't identify a poorly written specification it's 'cause I can't read the spec, and it's my fault. And if I let a specification change slide by me without telling the customer he's going beyond spec -- that's my fault.

--

Tim Wescott
Wescott Design Services
http://www.wescottdesign.com

Do you need to implement control loops in software?
"Applied Control Theory for Embedded Systems" gives you just what it says.
See details at http://www.wescottdesign.com/actfes/actfes.html
.

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