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The Hidden Costs of Low Quote Dev Shops: Overbooking

Sometimes, selecting an app development shop is like buying a plane ticket. At first, a lower price can be appealing, until you realize the airline has to make its money somewhere, and it’ll probably be a nasty surprise. Much of the time that comes from opaque baggage fees, convenience fees, upgrades, overbooking, and simply cutting corners on quality.

Many of those issues also appear in working with low quote dev shops. Let’s consider ‘overbooking.’

Many low-bid dev shops will hire developers (often overseas) and pay them a flat salary. Unfortunately, this incentivizes taking on more projects than is reasonable to pressure employees into working long hours so they can pay salaries and make a profit at the same time. Let’s look at an example.

The nasty surprises

Suppose a dev shop pays a developer $50,000 a year—less than half what you would normally pay for a domestic US developer. If they charge clients $25/hour for that developer, then 40 hours a week will allow them to break even for that developer. It follows that the way to profit off that developer is to get them to work more than 40 hours a week. The incentive, then, is to put that developer on as many projects as possible, so they’re working as many hours as possible. In this example, for every 10 hours a week over 40, the dev shop will make an additional ~$12,000 a year.

We at Thryv see this a lot when we’re rescuing projects that have gone off the rails. It’s not that overseas developers are worse than domestic ones, it’s that anyone who’s working 100 hours a week is going to make mistakes. The code will be ugly, poorly organized, and fragile just because whoever was working on it had ten other projects to get to. It’s unreasonable to expect that sort of code to be usable long term, and for startups lured in by the low price, this kind of mistake can have devastating consequences when it’s used as a foundation for the company.

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Should your app development be with an independent contractor?

Getting a app written, tested and released is a challenging process. Your options are many. Let’s consider whether you should hire an independent contractor to write your app.

Reasons to hire an independent contractor:

  1. Low cost… you’re paying just one person, at whatever lowest rate you can negotiate.
  2. One person to deal with… communication is direct and efficient.

Reasons not to hire an independent contractor:

  1. You need an expert… but not for every line of code. The trouble is, you either hire high, or low. When you have easy, repetitive code, you just need a lower cost coder. But for knotty problems, experience breaks out of the box. With an independent contractor, you’re either paying too much for some parts of your code, or your programmer’s out of depth.
  2. Speed. If you need a fast release, or a fast update, you need a group of programmers to share the load.
  3. The back end, and the design. Finding one person who can provide an API to a server, and an artful UX-optimized interface, to say nothing of a solid app released for both iOS and Android—is a rare thing. If you don’t find that, then you’re no longer dealing with just one person anymore, regardless.

Solution

Consider a company like Thryv, where you’ll be assigned a project manager. Communication is direct and efficient.

Thryv has access to a range of talents. These will work on your project as variety of tasks demands. And you’ll be billed by a sliding scale that fits the skill and efforts of the contributors.

 

 

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