FORGE PRICING MODELS: FIND THE RIGHT ONE FOR YOUR PROJECT
Pricing models dictate the costs, incentive structure, and flexibility of every product design project. Therefore, selecting the right one can be critical to your business's success.
Forge Product Development offers three different pricing options, Pay by Hour, Pay by Project, and Bulk Hours, to fit your project needs. Which plan will work best for a particular project and company usually is determined by two things, work volume and uncertainty.
PAY BY HOUR VS PAY BY PROJECT
For low volumes of work, the choice between pay-by-hour and pay-by-project usually depends on how much uncertainty is in a project. In order for us to quote a project complete, we need to be reasonably sure how much time it will take. This means we need to have a very stable scope of work, and usually experience with similar projects. Projects that involve developing and testing new technologies, materials, or methodologies, are usually very difficult to predict and therefore better priced via pay per hour.
Why not quote everything pay per hour? We could, but this comes down to serving you better and saving you money. Quoting a project complete, upfront, allows our clients to know how much to budget and decide if the ROI is worth it before they commit to anything. To quote a highly variable project up front, we would have to take a conservative estimate to cover ourselves from under-quoting and taking a loss. This would result in an unusually high quote. Because of this, it is better to simply bill by hour, so you only pay for the time you actually need.
You can see the influence of uncertainty on the gap between the pay by hour and pay by project price of two projects below, one with high uncertainty and one that is more stable.
As the uncertainty of a project goes up, the span of possible costs increases. The pay by project price must follow the top end of the expected costs, to prevent us from taking a loss. However, the pay by hour price can be anything within the possible cost range. When the uncertainty is low, the possible cost range is slim and can be safely quoted up front as pay by project, allowing for better planning.
BULK HOURS
If you have multiple projects, a single large project, or would like to use us to supplement, or serve as, your engineering department over time, then investing in bulk retained hours is the most economical and efficient option. In this scenario we will review the portfolio of projects you want us to handle for you and recommend a combined total number of hours. You can then purchase the hours in bulk, at a discounted rate.
In addition to the wholesale discount on the hourly rate, there are other benefits to using the bulk hour structure. For instance, the reduction in project management costs. The savings come from the simplification of project startup, scope changes and accounting work. Also, since the block hours can be applied to any project at any time, clearly defining scope limits up front is not necessary. This reduces the quote sign off lead time and allows for broad changes in project direction on the fly, at any point in the process. In addition, the hassle of tracking and coordinating payments on multiple projects is eliminated by merging them into a single repeatable payment plan.
When applicable, Retained hour plans are our preferred method of operation, as it eliminates a lot of the red tape between us and our clients, and frees us up to focus on responding to their engineering needs.
We hope this helps you understand our different pricing options, and the pros and cons of each, so that you can work with us in selecting the best plan for your business and project.