How can you avoid draining the entire budget if you've commissioned a development project?

The first step towards success is proper budget planning. It’s essential to consider not only direct development costs but also potential unforeseen expenses. This helps prevent situations where a project stalls due to lack of funding.

We recommend creating a budget with some reserve so that you have the flexibility to adapt to changes during the development process.

When planning the development of your own product, it’s crucial to have a clear vision of what you want to achieve as an end result. Once you receive an estimate at the initial stage of diving into the product, it's important to understand that this is just a preliminary calculation, and the cost may fluctuate as work progresses because new details emerge that were not obvious when you first became acquainted with the idea. In such cases, it is necessary to accept this reality and be able to work with it.

To do this, you need to stay in constant communication with the team and continuously update forecasts.

It's important to establish working conditions with the contractor beforehand. Most studios typically operate under the following format:

1. Develop a technical specification (TS)
2. Estimate the development cost
3. Sign a contract with a fixed payment amount

Usually, this involves a 50% down payment before starting development, followed by the remaining payment after project completion.

At first glance, this seems straightforward, but this approach might not suit zero-to-one development projects. Not every client can accurately write their TS.

A high-quality technical specification is undoubtedly an essential part of the development process. After all, it allows you to communicate your business needs to specialists who will translate them into code. However, one drawback of working with a TS is that once development begins, it cannot be easily supplemented or modified without additional costs and delays in the creation of the product.

The cost of your project may change during development, but the amount specified in the contract will remain the same. To protect themselves from these risks, developers may either charge you 50% more upfront or sell you additional work later at a higher rate.

The main issue is that you can't see how much time the developers are spending, nor can you make adjustments along the way. Sometimes, it's better to forego complex features to avoid spending all your money and still deliver a finished product.

With a fixed-price model, you don't need to communicate extensively with the developers, but this could compromise the quality of the final product. Ultimately, you might end up spending more than you would with other engagement models.

Hourly development is a work format where you pay only for the actual hours spent by the developers. This approach is convenient because you simply describe your request to the executor, they estimate approximately how many hours it will take, and then you pay according to your agreed-upon rate. The project manager demonstrates results weekly.

Thanks to this model, you:

1. Gain full control over project budget expenditures.
2. See how much time and effort goes into the work, which enables you to make informed decisions about the product.
3. Have the ability to easily modify requirements without needing to adjust the technical specification.
4. Monitor timelines by observing changes in the team's progress.

It's important to remember that hourly development requires active participation from both the service provider and the client.

To conclude our article, we'd like to share our opinion on what works best:

1. Work based on hourly rates.
2. Stay actively involved throughout the process.
3. Request reports detailing the time and efforts expended.
4. Ask for regular updates on cost estimates as the work progresses.
5. Be prepared for changes and don’t limit yourself solely to the technical specifications.
6. Avoid working with contractors if there isn’t trust.

Additionally, friends, if you wish to bring your product to life without unnecessary expenses, feel free to contact us for a free consultation.

We're always here to help!