Why are Businesses Willing to Spend More for Software?

Lost Canadian Abroad asks: "As a software developer I have always found it strange that large companies are willing to spend obscene amounts of money for software development. Until recently I have shrugged it off as 'the cost of doing business', but something happened not long ago that has caused me to start questioning that practice. The more I talk about it with other people, who are business people themselves, the more irritated I get about the whole thing. Why is it that if you're not charging a company tens of thousands of dollars for a development project that you're not taken seriously?" I've always wondered about this, myself. This practice seems to contradict common sense. Is it that higher prices imply a certain degree of quality and/or assurance to managers? Do you think that businesses might be better off if they took a risk and tried the lower end of the costs spectrum?

"I recently had a the chance to bid on a contract, which I didn't win because of my estimated project cost. The winner of the bid had an estimated cost of $15,000 whereas my estimated cost was around $5,000 for the same project. The contract was not a complex project: a system comprised of database-generated web pages, with file submission and minor document management features.

I had, in about 8 hours of preliminary work, 50% of the website and associated back-end completed and had the rest of the site roughed out for what they wanted. The work is simple and I think almost anyone who has done similar types of site designs would agree with me.

The reason I got for not winning the project was that my proposed bid was seen as too low.

Does this make any kind of sense to anyone? Why would a company prefer to spend $15,000 on a project instead of $5,000."

Comments

time

[martinflack]

Well most posted replies look like they're taking the psychology route. But let me offer a different point of view.

If the business is to assume that the bidding developers makes about $70,000 in salary, then you've effectively "said" to them you'll be committing yourself to this project for 26 days, whereas the other developer is "saying" 78 days. Perhaps they think this project is a two or three month project and they want someone who will be around?

I'm not just talking about coding... you have to consider delays (there will always be delays if you have to wait on them for anything, even just approval), training (sometimes dimwitted) staff on using your system, testing, approval (sometimes from a committee that will want changes), and lots of bugfixing (don't tell me you have no bugs, I don't believe you).

The more I think about it, $15k sounds more reasonable to _me_.

Slashdot folks are guilty too

[0x0d0a]

I'm awfully unimpressed when someone up here says says "I administer a 2 million dollar clustered E10K rig" or something like that. My first thought is that, if you knew what the hell you were doing, why couldn't you have done things more cheaply? Vague promises of "reliability" or "quality" don't really register with me -- people paying 3x for a hard drive (can't you just get three cheaper hard drives and use RAID?) or for a high-end system from Sun or IBM (what, you're not willing to do a little work yourself to save a ton of money), or for Oracle (most Oracle folks seem to just buy Oracle because it's "good" or because they've heard things about it, not because they've used all the alternatives and can make an informed purchasing decision).

The guy that impresses me is the guy that says "I replaced our old $20K Sun setup with a $5K pair of generic, load-balanced servers, either of which can be swapped out at any time."

And the same goes for software. You're using a $2k, a $20k, a $100k software package? What is it that you can't accomplish with a less expensive package? You're using PVCVS instead of CVS? Why?