Software Development Project Pricing:

Over the past three decades, there has been considerable amount of research done in the area of pricing and the role price plays as a determinant of a purchase decision. Although price is only one aspect that stimulates a purchase decision, it is probably the most important. With the history of pricing filled with failures, ongoing efforts are being made to enhance the processes and techniques used in pricing. The nature of software development projects, taking on the characteristics of a service, and the inherent inaccuracies of software cost estimation methods, adds further considerations on what pricing objectives should be used, how pricing strategies should be formulated, and which pricing method should be adopted. The complexities of pricing are further aggravated by the technical and business context of software development projects. Decision makers and marketers also have to price competitively and yet profitable for software development contracts which are mostly awarded through bidding. Current pricing practices are reviewed, and a pricing framework is presented to aid practitioners and academicians in the pricing of software development projects.