19

This depends a lot on how the two companies involved in the contract negotiation operate. You have to realize that there is always a cost of doing business, and somehow you have to recuperate it from the profits you are making. Think about your daily work, for example. You might work for 8 hours a day, but possibly you are productive and producing an actual ...


11

My company will sometimes engage into a "discovery" phase where we will spend 20-80 hours detailing the exact requirements of the project and determining the cost. We do this if we believe the requirements are not well documented enough or the project is so large that being off on the quote plus or minus 10% could mean 10,000+ dollars. The rate at ...


8

Pre-sales work is normally assumed to be at the vendor's expense, but usually I would expect the activities you describe (analysis and design) to be part of the work the customer pays for after the contract is signed rather than before. Detailed analysis and design requires extensive commitment and work from the customer as well as the vendor. The price you ...


3

These costs are (usually) covered by the vendor. This is inherent risk, which can bankrupt small, specialized startup, especially if it enters the market under-capitalized. As a side note, this was for example a reason my university lab stopped working directly with clients seeking customized solutions. We only work with solution-providers who do this task ...


2

As already answered, at some level this depends on what the sides agree upon, and there are no laws or rules governing this. Considerations that affect the decision of who pays, include: Will the quote be a simple number, or will it include the entire research you described? If you're delivering something useful, it's easier to ask to be paid. That said, ...


2

It does not matter the type of contract. All projects need to have a way to process changes because changes are a near certainty for every project in existence and will always be. The process does not have to be complex for smaller, less complex projects but there needs to be a way to understand the change, estimate cost and schedule impacts, estimate ...


2

It's a matter of how the vendor and the client negotiate the contract. Most commonly though, payments are made as work proceeds (monthly, quarterly, more frequently or less, etc) or at specific intervals (like agreed upon milestones, etc). It's a fixed-price contract, so both parties know upfront what needs to be payed, but vendors usually prefer to have ...


1

I worked at a small vendor with a simple rule: We need clear requirements. If you don’t have clear requirements you can hire us to write clear requirements, and we know better than most clients how to do that. You pay for the service, but the end result is yours, you can take it to another vendor, or implement it yourself, or get a quote from us to implement ...


1

Usually the same way companies pay for their sales teams and advertising budgets: Out of their own profit margin, as a cost of doing business. The idea is that you spend $xxx,xxx and this brings in business that generates more money than it cost to acquire it. The contract itself usually has a fairly hefty 'margin' baked into it precisely because it has to ...


1

First of all, always there is a proposal that you should prepare to show that you have the abilities to do the customers' requirements as well as they want. And most of the time you and your team have a sense of these abilities and you can put your comments on the time schedule and cost of the project. These kinds of preparation expenses are on the vendor's ...


1

The answer to the first two questions can turn out to be simple or complex, but it is the same regardless of the size of project: negotiate. The evaluation as to whether something represents a change and then how much it costs often involves negotiation because not all eventualities can be be precisely defined in a contract. Even if it were possible to agree ...


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