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Developer pricing and add-on development costs

Discussion in 'Resource and Add-on Discussions' started by HWS, Nov 17, 2015.

  1. HWS

    HWS Well-Known Member

    Since you said it is 1000 lines, I assume you worked one day at it. Okay, then let us calculate:

    8 working hours for $120 each = $960
    I don't know your tax rate, but adding 25% seems appropriate:
    $960 + 25% = $1200

    Now, think about how many licenses will be sold. Giving the very small market with XenES, let's say 30 licenses...
    1200 / 30 = $40

    So the price should be $40 plus sales tax (where applicable).

    For a price of $20, you would have to sell 60 licenses of it. If you think that is realistic, $20 is okay. It just depends on your valid and experienced guesses.
     
    Last edited by a moderator: Nov 17, 2015
    Daniel Hood likes this.
  2. Daniel Hood

    Daniel Hood Well-Known Member

    I wish I made $120/hr. I also wish I was allowed (obviously I'm allowed but I won't get sales) to price add-ons via calculations such as this.
     
    Liam W likes this.
  3. Alfa1

    Alfa1 Well-Known Member

    lol. Thats 250k a year.
     
  4. HWS

    HWS Well-Known Member

    Daniel, let's face it: IF you plan to do XenForo add-ons as a business, you HAVE to calculate like this. Otherwise some day you need to stop coding for XenForo, like Syndol, Jon, Borbole, Rigel and all the others did.

    If you plan to employ coders for your business, you have to even calculate higher (because of additional employment costs).

    People here need to differentiate between the coders who code for fun and the professional businesses here. The XenForo market is small, so professional add-on prices will be high. This may change if the market grows and you are able to sell more licenses of a product.
     
    Last edited: Nov 17, 2015
  5. HWS

    HWS Well-Known Member

    Most professional web developers earn even more per hour. You know that.
    And you also know that your work is worth it. But you can of course change that rate with another rate you feel you are able to pay for life from and calculate from there. ;)
     
  6. HWS

    HWS Well-Known Member

    It sums up to about $100k per year, since most people and business owners need some time out of their job and time for organizational purposes. And 100k (before tax and social wellfare) per year is appropriate for a professional web developer.
     
  7. Daniel Hood

    Daniel Hood Well-Known Member

    I'm taking everything you are saying as a compliment. It's just unfortunate that it's not really like that. I do believe I fall in the "Senior Developer" category but http://www.glassdoor.com/Salaries/senior-php-developer-salary-SRCH_KO0,20.htm proves that we do not make that kind of money, especially post tax. I don't really want to say where I fall in correlation to the national average but even the national average is half of what you're proposing (pretending taxes don't exist).

    Take into account that we're working for a small market and investing in the hopes that it grows and brings more long term benefits, we tend to accept the fact we will make less than we could otherwise now. Hopefully later on we can make way more per hour when it comes into renewals and new license sales.

    At the moment, I don't see it being more than a side business. I do intend to grow it to where it's feasible to live off but I doubt I'll ever work full time on it (though I may employ people who do -- eventually). Syndol and Jon made a similar mistake, they took all the money up front and had no business plan for supporting the products. It became a chore to work on the add-ons after the initial wave of license sales. My plan is significantly different. I don't create new add-ons planning for sales. When I release a new add-on, it's sponsored by someone. A high percentage of the time I release a new feature to an existing add-on it is either sponsored by someone or it's heavily requested and I fully expect new licenses to come from it fairly quickly.

    While I don't generate enough money to quit my job, I make a reasonable hourly wage now from my add-ons if I were to break it down and actually figure it out. It's not near what you're proposing but it keeps me content and I'm not going to be going anywhere (unless of course add-on sales come to a complete halt and custom work washes away -- or I find someone like you willing to pay me $120/hr for development steadily ;p).

    My business model works for me because I'm not 100% dependent on new sales to fund the development, sponsorship and renewals fund majority of it.

    It's unfortunate that I can't just produce an add-on that I think is a good idea and bank on the fact that 50 sales will come in due to it being a good idea. It's just too small of a market, maybe some day though.

    Alfa's calculation assumes 40 hours every week. Yours is apparently giving 6 months off? The fact you're separating organizational purposes out is interesting. Leads me to wonder if you're assuming only time spend literally typing code should be billable or if time debugging and setting the db schema etc should be billable as well.

    Note to staff: We're kind off topic. I'm okay with this splitting into another thread if @HWS is. Starting at his first post I believe his first post and down would make a great start to a thread on a nice topic.
     
    DroidOne and HWS like this.
  8. Chris D

    Chris D XenForo Developer Staff Member

    Ok, done.
     
    Daniel Hood likes this.
  9. Slavik

    Slavik XenForo Moderator Staff Member

    Don't be afraid to charge more for quality work.

    Underselling yourself equally undermines a market as much as people charging too little.

    I have turned people away because they complained my prices were too high, but I stick to my prices unless there is a very good reason not to.
     
    Daniel Hood likes this.
  10. rainmotorsports

    rainmotorsports Well-Known Member

    Don't forget "Good, Fast, Cheap" Pick two. If it's good and done fast it can't be cheap. If it's good and cheap it won't be done anytime soon. If it's fast and cheap it will be crap. It's okay to take a back burner job for low cash but don't make any sacrifices if they aren't paying you well.
     
  11. Brogan

    Brogan XenForo Moderator Staff Member

    I've had a few comments that my add-on is over priced but it still sells.

    If I could do it over though, I would have fleshed it out more before releasing it and I would do annual renewals (which will likely be introduced when it's rewritten for XF2).

    I had no idea it would sell as well as it has though and had no plans initially to develop it further.
     
    Alfa1, DroidOne, Martok and 3 others like this.
  12. Lisa

    Lisa Well-Known Member

    Can I just take this moment to look smug and say "I told you so" :D
     
    Daniel Hood likes this.
  13. Daniel Hood

    Daniel Hood Well-Known Member

    Yeah I get that pretty often, still sell as well.

    You also have the extra benefit of using it within your own community, that could make it worth it even without a single sale. That said, annual renewals are necessary when you get into supporting products and adding features that you don't personally use. It's a good idea for you to have a renewal process in place, usually.
     
  14. Brogan

    Brogan XenForo Moderator Staff Member

    I barely use any of the features :D

    A lot most of them have been added purely to keep customers happy and to generate sales.
     
    Daniel Hood likes this.

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