Is there a logical way to come up with pricing for a service such as below that my friend came up with. Are these valid ?
- Split down the service into as many small steps as possible. Make sure to split the process in small steps each taking not more than 1 hour. Add as many details as possible. Calculate time for each of the step.
- Include time to setup the system and environment for development for each step.
- Include time for research for each step.
- Remember that there will be lot of email exchanges in understanding what the client needs. Writing and responding to email costs a lot of time. Include that time. Clients will revert back on almost everything with requests for modifications. Assume double the time for fixing modifications.
- Include cost for skills you have already learned. Like linux administration, php, js programming skills.
- Remember that no one is productive for more than 4 hours a day. So double the estimates. Include opportunity cost.
- Add 30% buffer on top of the final estimates.
- Pricing should be more if we are doing this service only for this customer and never going to repeat the exact same thing in future for any other customer. Add 40% more margin for one client jobs.
- Remember on average companies charge 1000usd per day
- Include time for fixing bugs, which will involve google research.
Finally he had this equation.
value of per day = last salary / 20 + 50% charges for taking responsibility + 30% appreciation for every year since your last payment