We are a New Delhi, India based bespoke software and solution provider with a focus on ERP, Supply Chain Management and Warehouse Management for several domains.
We approach this issue slightly differently.
We encourage our customers to define their business processes and then grade (on a scale of 1 to 10 where 1 is the minimum and 10 is the maximum) these business processes according to the pain they cause in their business (in the absence of appropriate software) and the reports that could be helpful to them in mitigating these pain points.
Our costing team creates a matrix defining each business process and the estimated time with the associated cost. Our team also defines the business processes which would be pre-requisites for the subsequent processes.
This methodology enables our customers (and us) to have a sign-off sheet and a fixed cost contract so that both of us know what is being paid for, and how much and when. During the execution of the project (or afterwards), in case any additional requirements come up, we quote a per hour cost. While estimating the time for these changes, we also give a ‘Not to exceed’ cost for the approval of the customer.
This approach eliminates the uncertainty for both - our customer and us. The biggest benefit of this approach also is that the customer need not necessarily have a technical co-founder. Effectively, we are part of their team without them having to dilute their equity.