How to Choose the Best Software Development Pricing Model for Your Project
Fixed Price, Time and Material, Mixed Mode, Dedicated Team. What is the best software development pricing model for your business?
Based in Belarus, our custom software engineering company has delivered more than 50 projects to industries such as healthcare, e-commerce, insurance, education, finance and banking. Since 2014, we have been providing IT outsourcing services to organizations located mainly in the USA and Europe. Collaborating with CEOs and CTOs for over 6 years, our experts have helped them address hundreds of business and technical challenges.
At the moment, we are witnessing the rapid growth of IT outsourcing. Although this practice allows saving costs and accessing high expertise, there are some issues C-level executives aim to resolve. In this article, we will consider the key concerns of CEOs and CTOs when outsourcing software development tasks.
The main concerns of CEOs and CTOs when outsourcing software development
1. Legitimate issues
Legitimate issues have to be taken into account before hiring a software development outsourcing company. When drawing up a contract, you should include the clause about protecting intellectual property to prevent illegal distribution of your ideas, requirements, and know-how.
Ask a potential IT service partner to sign a non-disclosure agreement before sharing business-specific goals and sending any documents, for instance, a technical specification. Write down deadlines and deliverables to ensure all stages will be completed on time. Since it is often challenging to predict the exact number of the necessary tasks—especially for long-term and complex projects—it is also important to choose a proper payment model.
2. Payment model
Concluding a pricing model agreement, you and an IT service vendor will define the work scope, timeline, and project cost. It will also indicate what you actually pay for: the number of spent hours, completed tasks, or the end result and performed KPIs.
Our customers said that sometimes they felt difficulties when choosing a type of an agreement: Fixed Price, Time and Material, Mixed Mode, or Dedicated Team, especially when they wanted to establish a long-term partnership with an IT outsourcing company. In this case, a high level of flexibility is crucial: while it is possible to make accurate time and budget estimations for small occasional activities, it is challenging to calculate the exact cost of building a complex product without a detailed technical specification.
At Arateg , we analyze the project requirements to understand your business goals and help you draw up a pricing contract according to your needs.
Read our article “How to choose the best software development pricing model for your project.” to learn the peculiarities of different agreements.
3. Project management
How will I control software project development if an IT outsourcing company is located in the other country? This is a common concern of C-level managers that IT service vendors should address. Before delegating IT-related tasks, you should make sure a potential partner provides daily reports containing information about performed tasks, planned activities, and technical issues solved by the team.
In our software engineering company, we focus on process transparency, so that you can easily control the project. We hold regular in-person and virtual meetings to discuss the required issues and show the outcome of each stage.
Our experts communicate with you to get a clear understanding of your business needs, show intermediary results, and receive your feedback. We also give you access to a time tracking system, so that you can monitor deadlines and estimate the number of spent hours.
See what our customers say about cooperating with Arateg.
“We had a dedicated team of developers and the PM who was my contact person. We had weekly meetings and 1 time a month a meeting in person with the team!”
“Arateg team is very responsive. We can reach out to them at any time over Slack or Jira. We had never the feeling that we are not heard. The communication is superb. We never lost time due to communication.”
4. Deadlines
The ability to meet deadlines is one of the key client concerns when outsourcing software development. It is especially important when the organization aims to improve time-to-market while saving product quality. To deliver the project on time, software engineers should need to analyze the customer requirements and estimate the scope of work properly.
In our firm, we also employ best practices such as continuous deployment and continuous integration that allows us to build, test, and deploy apps much faster. With Agile, our team provides frequent functionality delivery every 2-4 weeks. Showcasing you intermediary results and collecting your feedback, our software experts make sure the end product will align with your expectations.
“We are quite happy with our choice to work with them. Reasonably priced, no delays, great communication and high-quality code. We were able to develop the site from scratch and launch within 6 weeks.”
“Delivered always in time. We could plan the whole year upfront and they stick to it. Even greater changes of the timeline were no issues for them.”
5. Data security
The security of sensitive information is one of the primary concerns of CEOs and CTOs when outsourcing software development tasks. How will a software engineering company provide data privacy? How does a third-party contractor safeguard software and hardware while preventing data breaches? We recommend that you find out the answers to these questions before hiring an IT service vendor.
Here at Arateg, we employ multi-factor user authentication, reliable passwords, and virtual private network (VPN) connections. What’s more, our software experts use tools such as Cloudflare and Load Balancing to protect from denial-of-service (DDoS) attacks, which are malicious attempts of intruders to make the system partially or completely unavailable—or at least decrease the page load speed—by overloading the target with a flood of traffic.
Additionally, we regularly hold security audits for software and hardware to detect vulnerabilities. Thanks to this practice, our developers prevent any issues before they are severe. Our team also tests recovery plans and incident response strategies to enable data retention in case of disasters or failures.
6. Remote work during COVID-19
As software development outsourcing allows saving costs while getting access to high-level expertise, now businesses are using this practice more often due to the COVID-19 crisis. However, one of the main customer concerns is how the vendor builds successful remote collaboration to effectively deliver services.
Furthermore, it is difficult to ensure data security in the context of distant cooperation. Performing tasks at home, employees need to prevent even their families from access to working apps, documents, and other important sources.
Check out the list of 15 applications for successful remote work.
At Arateg, we have established effective remote collaboration since March 2020. We hold collective team meetings 2-3 times per week to plan the work and estimate what has been done during each day. In addition, our software designers and engineers track time, update task statuses, and estimate deadlines in AraIS, our internal information management system. This enables us to monitor the project completion.
To protect sensitive data, we employ VPN connections, set up robust passwords, use role-based data access control, communicate via messengers and online collaboration platforms that encrypt data.
“Providing data security and privacy is a top priority for Arateg at all times but also particularly during the coronavirus pandemic. To ensure confidentiality when working at home, our IT outsourcing company has held extensive training introducing our team to the best data security practices for remote collaboration.”
Why should you cooperate with Arateg?
Arateg is a custom software engineering company that helps startups and SMEs meet business-specific needs using technologies such as blockchain, big data, and artificial intelligence. Since 2014, we have been providing software development outsourcing services that include not only app creation but also UI/UX design or redesign, quality assurance, product modernization, and consulting.
With solid expertise in the IT industry, we assist our clients in preparing a software requirements document, tailoring a pricing model, estimating budget, and choosing on the technology stack. Our experts employ the best data security practices and reliable online collaboration software to effectively deliver services even during the COVID-19 pandemic.
If you aim to build a digital solution or improve the existing one, contact our team. We will get back to you within 1 day and help you address all challenges.