Many companies hire software development shops to build their apps, websites, or custom software either because their current staff lacks the bandwidth or know-how or because they don’t employ any developers at all and contracting the work out is cheaper. Cost savings make hiring a software development shop an attractive option; however, the drawbacks are usually associated with ongoing support once the app is built. Because companies have more clients than just you, how do you ensure that your app isn’t put at the back of a long waiting line? While you don’t have to worry about the financial burden of a full-time employee, you do have to manage the risk that comes with your partner not being available 24/7 to handle emergency situations. Deciding which support agreement is best for your business is an impactful decision. AppIt Ventures receives questions regarding ongoing maintenance and support from every business and entrepreneur we speak with, so we’re writing this blog to inform you of your options and help you determine which model is the best fit for your business.
Time and Materials (T&M)
This model provides total flexibility for your business, as you approve the number of hours you need when you need it. This is the ad-hoc approach to ongoing maintenance – there is no definite monthly budgeting or fees. As bug issues or feature updates come up, you convey that to your shop and they come back with a quote and timeframe. You decide if and when to move forward with the work. In this model, we charge $100/hour for a blended rate (meaning anyone who works on the project bills at the same rate).
The downside to this approach can be turnaround time. Since these hours are not pre-scheduled or pre-paid, no resources are on standby ready to drop everything and work on your app. If your development partner is at capacity, you’ll have to wait for resources to become available. If you’re using this approach for your support plan and know you’ll need development work completed in the near future, it’s smart to speak with your partner as soon as possible so that they can tentatively reserve resources for you.
In the event of an emergency, AppIt Ventures and many other development contractors will pull resources from other projects to attend to critical issues. Most companies will do anything they possibly can to help their clients in tight situations, but it’s important to explicitly ask your partner how they’ll handle emergency issues so that both parties know what to expect if the moment arises.
These plans involve a fixed monthly dollar amount for a set number of hours. Typically, these agreements span at least 3 months, so you’ll be invoiced that fixed price at the start of each month for the duration of the contract. Businesses use this model for bug fixes and small changes or additions to the app. This approach is best if you know what your product roadmap looks like for the next few months. For companies that are about to launch an app and immediately begin adding additional features after launch, this support option is a great fit. The biggest benefit to a support retainer is that you will be guaranteed scheduling availability over the course of your agreement, so quick turnarounds aren’t a concern.
In this model, AppIt Ventures will provide recommendations for retainer size based on application size, business goals, timeframe, and budget. While most other companies operate their retainer contracts under a “use it or lose it” model, we strive to make this option work better for our clients by allowing them to roll over any unused hours to the next month until the end of the quarter. This allows our clients the freedom to tackle bug fixes as bugs come up as well as put unused hours toward feature additions or enhancements on a quarterly basis. If you don’t work with AppIt Ventures, make sure you ask your partner how they structure their retainer agreements.
For clients who have enough work for a full-time resource, the best option is a staffing model. This model typically requires a longer-term commitment. For reference, AppIt Ventures’ staffing agreements require a minimum 6-month term. Pricing for these agreements is usually dependent on the skillset and experience level of the developer your project requires. These agreements are best for more mature companies that have a concise product roadmap.
If your business does not have any technical employees on staff, AppIt Ventures can assign a project manager to help manage the resource, assign tasks, and provide updates to your business. This PM resource is typically invoiced on a separate T&M agreement. If you do have a technical employee on staff, your business can choose to manage the developer on your own through direct communication, negating the need to contract a PM. If you fall into the former camp, check with your partner to make sure they have PM availability before proceeding with a staffing contract.
Again, these agreements come with a long term commitment, so you’ll want to make sure your business is ready for this model of support. At AppIt Ventures, we usually see clients start with one of the other options until their app grows large enough to warrant a transition over to this model.
Final Thoughts: Flexibility vs. Pricing
It’s not always easy to know how the needs of your business will change with time, but it’s almost certain that they will. One support agreement might work best now, while another could be a better fit later on as your business grows. If you foresee an imminent change in your business, tell your partner. Most will be more than happy to guide you toward a new style of agreement that will accommodate you best. There may also be times when the right plan for you may consist of a blend of the above-listed options, and that’s fine too. Use this information to help you craft the right ongoing support plan with your partner. And if you’re having trouble coming to an agreement, don’t be afraid to shop around for a different company that might be able to offer you a better fit and more flexibility.