>Of course they do. These people are the reason a large percentage of projects never get completed successfully.
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That number is about 80% that fail BTW...


>I'm not talking about this type of collateral benefit. This type of thing could happen just as easily with a T&M project vs. a FP project. Whether the buried, as you say, work/cost is intentional would be, I believe, the issue.
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However, mainly what I am talking about is this. Say you bid a project at X dollars. Based on the specifications, you estimate that the project will take you Y hours of development. You multiply your rate times the hours. For the sake of this simple example, there will be no other costs (travel, materials, etc.). Finally, you add your profit. This could be some percentage or a fixed dollar amount. Now you have Z dollars that you will charge the client to deliver some set of deliverables.
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Typically, you don't figure out profit like this. Rather, you figure out the # of hours. The more granular you make break the tasks down, the more accurate your calculations will be. Your rate should already have a profit % in it. At this point, you simply multiply # hours by rate.

I highly question methodologies that simply adds a number at the end of the process to figure out profit..


>You have made the esitmate in good faith based on your current knowledge and abilities. During the life of the project, you have an epiphany. This could be brought on by meditation, self-trainig or whatever. Something you initially thought would take you Y hours now takes you Y₁ hours. This new number is half of the original estimate. As luck (for you as the developer) would have it, this was one of the more complex parts of the project. You finish the project expending 42% less effort (hours) than the original estimate.
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That is one heck of an epiphany - to reduce by 42% If it were me, I would feel compelled to give something back.

There are those that say I have an interesting moral compass

I would not give the client back 100% of the savings - but I might give him anywhere from 25-50% of it. I do this because it is good business. The client will know that almost half as much time was spent. He might not say anything to you - but the questions will lurk. Eventually, it comes out.

And, if I treat a client like this, it is more likely that a good longer-term relationship can be fostered...


>Costs have been reduced; however, the price remains the same. Your profit goes up! This is not fraud.
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Never said it was... But you have to understand that if it takes half the time, the client is entitled to question that. 10% to 20% savings in time, I will buy that. Almost a 50% differential in time, and it looks more like blatant padding. If I as the client make that assertion and use your own estimates to back up my assertion, you will have the burden of answering that claim.


>The same can be accomplished by using the perceived value of deliverables. Instead of determining price based on cost, you determine price based on how much the client will pay for what you are offering. If one of the deliverables is a new system that will save the client hundreds of thousands of dollars, the value should be quite high and consequently, the client should be willing to pay a significant amount for it. Most likely this amount will be higher than anything you could charge based on a simplified rate/hour fee.
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No question this is a legitimate way to go. But, the means are very different in achieving the same end. If the client knows and understands this is the methodology, I don't see an issue with this whatsoever. Essentially, you have changed the cost-driver...


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Basically, it comes down to what are you selling. Are you selling your services? Or are you selling the fruits of your services? It could be that one is perceived to be more valuable than the other.
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IMO, you are selling services. The fruits of that services are the by-product of your work and the client's efforts - period. Whether you can bill based on future value that is derived is another story. But in no way does that mean you are actually delivering the "fruits".

It does not come down to what you are selling, it comes down to how good of a salesperson you are...< g >