Price estimation is a very sensitive question, which demands a deep understanding of the amount of work needed for a solution development. Preliminary estimate of the costs is made during analysis stage. The main factor, on which the cost estimation is based, is labor intensiveness: time and resources needed for solution development. Base labor cost per hour for most of out specialists one can find in Basic prices section. This basic price can be increased in following situations:

• Work in undertime
• Use of innovative technologies
• Functional difficulties and big size of the project
• System reengineering
• Risks

Depredating on the project, we can offer to variants of the price policy: fixed price or wage per hour.

Fixed price approach
Fixed price model assumes that customer pays a fixed price for clearly determined functionality. During analysis stage our managers give information about project budget, required functionality and schedule. After all parties involved agree on all items included in requirements specification, a contract is signed and work on the project starts. Despite of some apparent benefits from the customers point of view, this approach has some considerable drawbacks:

• Customer has to have a clear understanding of his requirements and amount of work needed to complete the project
• Such approach assumes that during the whole development cycle customers business process stay the same and do not change
• Customer has to pay additional price for all changes, which are not in the requirements specification and for all additional services, which are not in the contract
• Customer has to be highly motivated on close cooperation with the development team and has to have an ability to quickly transfer all required information to the developers

Fixed price approach is used at Baltpoint only for relatively small projects with minimum risks. Project realization is divided into several steps agreed in project schedule. Payments are done also in stages, after signing stage closure documents.

Wage per hour approach
When using wage per hour approach, customer pays for each working hour spent on the project. This is the most flexible approach in the case of development of big projects with not known in advance amount of work required or with often changes in requirements. Wage per hour approach motivates customer to close and effective cooperation with the development team, which lead to the completion of the project in minimum time. Usually such an approach gives better results than a fixed price one. The drawback is lack of the information on the final price and time needed for the development.

Project realization is divided into several steps agreed in project schedule. Payments are made on regular basis: once or twice per month.

In some case we offer our clients mixed approach, in which to get most efficient solution we combine both of the abovementioned approaches: part of work is made for fixed price, and part is based on wage per hour approach.