How much is the fish?

“Money in the morning, chairs in the evening.”
- Can you do the opposite?
- You can, but the money in advance.

In this article I would like to discuss the issues of remuneration of developers, designers, managers and entrepreneurs (sic!) For working on a typical project.
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Experienced participants in this process and extremely experienced participants may not find new information for themselves; I will try to entertain you with the exquisite beauty of the text. Moreover, in this case, you can express your competent opinion on a given topic in the comments.

I have some experience in the status of an employee (the one that is “hired” once a month), the worker (freelancer), the manager, and in the status of a customer and as an entrepreneur.

So, "fixed price" or "time & materials"?

In our project, we had to use both schemes: at the time of enough money and their confident replenishment every month I absolutely did not break off to pay for the work of developers according to the time & materials scheme. The problems began when the actual budget of the project exceeded the planned one by two times, and the source of finance was covered with a copper basin (a consequence of the Crimean and the dollar-crisis).

I understand and accept the desire of a person to receive money for the time spent on the project, but I also understand the customer’s desire to pay for the result of the work. And since the time-based payment scheme (in its pure form) does not imply a guarantee of results, the customer or entrepreneur will incline either to the minimum hourly rate in the case of freelancing, or to pay the minimum monthly salary in the case of long-term work on the project, which reduces the fairness of payment for mental or in the case of designers, creative work. If the payment goes on a fixed price, the customer is no longer so worried about delaying the project, unless of course we are not talking about two or more times increasing the agreed deadline for the task.

As you may have already noticed, both schemes have their own advantages and disadvantages. Let's focus our attention on them.

Payment for the result :

• the exact formulation of the problem with the specified performance criteria is necessary,
• in most cases it is necessary to draw up a contract with penalties (delays),
• the performer can receive an advance payment of up to 50% of the agreed amount,
• ease of resource planning for project execution,
• high work efficiency (the contractor seeks to complete the task in a short time).

Payment for time :

• necessary accounting and control of working time
• underestimation of the cost of labor of the performer by the customer,
• the performer receives a steady, albeit small influx of finances,
• lack of understanding by the customer of the exact amount of resources (time and money) to complete the project,
• reduced performance (the contractor is not motivated to finish the work as soon as possible).

As usual, the truth is somewhere near, or rather, in the golden middle. The customer should seek to define the task as much as possible, specifying the amount of payment for the achieved result at a certain time with the contractor, and pay for work on complex and unclearly defined tasks using a time-based scheme. The executor should seek fuzzy tasks to be converted into a time-based payment form, taking the condition of paying for a deterministic task upon its completion, and not for the elapsed time for performing it.

That is, by balancing two opposing systems, we can achieve a state of stable equilibrium and get a combined payment system . Such a payment system will allow both the sheep to be fed, and the whole wolves, and the shepherd at the gesheft.

It is difficult to describe the implementation details, for the implementation of such a system, personal experience and the desire of all participants in the process are necessary. I think it’s enough in this article to describe the concept of such a system, which was done above.

Ps . In the case of work on a startup, a good way to save money from an entrepreneur or investor is to issue options to developers, however, if they choose a bird in their hand, then they should not count on a future crane in the sky.

Pps . Interestingly, the most financially unprotected participants in the process, about whose remuneration no one bothers except themselves, are entrepreneurs. Often they work for a long time for free. And after all, it is these little horses that carry a cart with cocaine to consumers. The law does not guarantee that they will receive payment for their work, unlike workers who are protected by the Labor Code of the Russian Federation or the contract. The risk of their work and responsibility for its performance are naturally proportional to their income.

The customer is the fastiest entrepreneur. This is multiplied by a million customer order artist. This is a customer.