Does Price Convey Quality?

As Woodridge Software has gotten busier, we have of course added staff, but we’ve also raised our rates. I think this is a natural response to having more potential work than we can perform. As we’ve done this, I’ve discovered something that was counterintuitive, at least for me: often, it is easier to sell a project at a higher rate than a lower one.

The reason for this is that for many prospects, price conveys quality. Prospects figure, “They charge more, so they must be better.” I would say that this is loosely correct: if you find a cheap developer, there is probably a reason he or she is cheap, and you get what you pay for. On the other hand, if clients keep coming back to a developer or firm that charges more, those clients must have some reason for doing so.

Unfortunately, the correlation is only loose, and is ruined by sub-par firms that have figured this out. These firms charge more because they know some prospects will assume they, therefore, do good work, but the firm regularly does a poor job. As a prospect, it can be very hard to deduce which firm is which.

So, to prospects, I would offer two pieces of advice. First, don’t be afraid of a higher rate. It probably means the firm’s quality is higher, and a higher hourly rate can produce a lower total project cost if the developers are sharp and experienced. Higher-quality development means the product better meets the needs of users, is built right with attention to detail, and stands the test of time.

Second, don’t trust the price alone when assessing quality. Instead, look at the bios of the team. Ask to see examples of previous work, and importantly, talk to former and existing client references that the firm provides. Ask the team whatever technical, or at least application-related, questions you can, and see if they speak and answer intelligently. This gives you the greatest chance of deciding whether price does correlate with quality, or if the firm is an outlier – hopefully in your favor!

Categories: Business