Ethics... and the lack of it.

[Kay C Lan]

Alejandro

(original post was too long so I've deleted your quoted post)

As for comment a)

You are pretty close, but the client being able to declare the value 10,000
times more than you charged, well that should be based on some hard
evidence, some metrics. Yes, maybe there was a little over evaluation
without hard fact in the dot com bubble, but that was more due to the
misconception of what they thought their product was going to be worth in
the future. As with the bubble burst, and in your case, the real value of
the software will be measurable once it's up and running - and in the case
of the dot com, most of it was proven to be rubbish. As Jim said, managers
may use different metrics, and come up with a different evaluation than you,
but this is very different to what you are going to quote to create the
software in the first place - see below.

As for comment b)

Yes you are going to have to understand at least part of the business. ie,
if your software is going to replace 10 Data Entry personnel, you need to
know what the data is, where that data comes from and where it's going.

So then how much do you charge for your software that replaces 10 people?

If these people are paid $20,000 per year you might think about charging
$200,000 because, after the first year, the software will have paid for
itself. Unfortunately, if the data comes in as plain text, goes out as plain
text, and all that needs to happen in the middle is that some additions and
averages are calculated, every other software developer on the planet will
undercut your quote because they know the math and can write such software
in no time at all.

On the other hand, if those 10 people are Nuclear Physicist, and are paid
$200,000 a year to work on a Large Halon Accelerator, and the data that
comes in comes in from 10 different sensors that talk in their own propriety
protocol, and the data needs to feed into multiple complex scientific
equations depending on a vast matrix of factors that only a Nuclear
Physicist could understand. Then maybe as the only software developer on the
planet who holds a Masters in Rocket Science, and prepared to decipher the
sensor protocols, charging $1,000,000 for your software might be perfectly
acceptable.

It's not Laissez-fair, it's 'supply and demand'.

The value of your software to you is based on your time, the value of your
software to a company is base on their bottom line, the two will always be
different, probably very different, and dare I say, irrelevant. The only
relevant factors are, will you be compensated sufficiently for your time and
will your software have a positive effect on the company's bottom line.

If I were to give another analogy. It's like diamond miners. Just because a
miner digs out $1,000 worth of diamonds a day, doesn't mean he's going to be
paid that, even if the diamonds end up in $10,000 jewelry. Any man can dig,
but few can be Harry Winston, each will get a different cut of the diamond's
final value; it's supply and demand that determines each person's cut.