Should I Disclose My MVP Budget Upfront to Development Companies?
Written by Gabriel Radic, Head of Product at MVP Factory
Most people will tell you to never disclose your budget before you get a quote, as it makes it easier for a contractor to overcharge you. But that knee-jerk reaction that is not necessarily useful.
Announcing your budget upfront is not a bad thing, but you will have to adapt your perspective. Here are some insider tips from a product manager who built projects small and large for the past 20 years, and whose job is to provide such estimates on a daily basis.
“How much will my project cost?” becomes “What can I get for my budget?”
You will probably not get an offer for a significantly lower budget, as you expected. Instead, you will get many offers for different levels of service. Do ask around for multiple quotes for your project; you will find that for the same fixed Price, the variables you are comparing are now the delivery Time and the Quality. Some providers will also adjust the scope if either the Price or the Quality get out of hand, i.e. propose a simpler MVP version of the project.
It’s not really far-fetched
Many freelance and offsite marketplace websites offer the “fixed budget” option for projects, and it works out most of the time. Services like UpWork made it easy to make providers compete for your project, with quotes that aim to implement projects in the shortest time. Unfortunately things get crowded quickly on such sites as many providers will make unrealistic Time estimates to stand out. The result is often a significant penalty for Quality.
Better transparency for better estimates
Having the budget information in advance makes it a lot easier for the contractor to offer you a holistic solution that will fit your budget.
I had a few RFQs (requests for quote) in the past that provided budget information, and I had many more without any hint to the budget. From experience, knowing where the milestones are will get you an offer for a product that is much better aligned with your expectations.
It’s all about trust
Its business survival instinct to “play your cards close to your chest”. It’s not a bad thing, but remember to keep your eyes open for opportunities to work together with people you trust.
The good news is that there are many product development companies that are not looking to take advantage of you. Many of them–or I should say “us”–are more interested in delivering a successful product and creating a lasting collaboration.
Basic security precautions
Here are some obvious security precautions you should take before agreeing to a quote and starting a project:
Sign an NDA before you share sensitive information.
Challenge any estimations from providers you don’t know.
- Don’t pay an advance without a signed contract with clear, timed deliverables.
These are true regardless of the complexity of your project, your budget or your expectations.
Have fun building your next big thing!
Gabriel Radic is the Head of Product at MVP Factory, the Berlin based company enabling companies of all sizes to build and scale top technology products, combining the best engineers and designers with artificial intelligence and access to the MVPF platform.
He has built products since 1996, both for his startups and for small or public companies. His experience includes starting 8 Points Consulting, Entertainment Learning and working at F-Secure, Rocket Internet and Auctionata.