Payment plans and why prepayment is important

Payment plans and why prepayment is important

July 7, 2010

EDISON has two basic payment plans. These are based on international software development experience and guarantee maximum reliability and stability for both the client and the contractor. As a rule, the project budget is drawn up only after all of the technical details of the project have been discussed. Depending on the specifics of the planned development project, the client is offered a fixed or time-based payment plan.

Clock and dollar

The fixed payment plan is the most convenient when the client has clear demands laid out in the requirements specification for a project. Such a plan can be drawn up by the client or developed by EDISON experts and submitted to the client for approval. If more flexibility is required and tasks may change during a project then the time-based payment plan is applied. In this case, a special development team is formed, which consists of the most competent specialists in the given sphere. Each team member is specially selected for a particular project based on their unique competencies.

We provide our partners with all the technical means necessary to control and monitor team activity, including: communications, file servers, bugtracker, project administration system, source code repository and other tools which allow the client to manage the team independently. When opting to pay per hour, the client makes a prepayment (or “deposit”) equal to the team's monthly fee. This deposit is kept for the duration of the project and is later used to cover the cost of the final month's work. Thereafter, monthly payments are conducted on the 1st–5th of every month according to the actual hours worked within a previous month.

How is fixed payment conducted?

Diagramm 35-35-30

When implementing a large project with specific goals and requirements, development work is divided into several stages. A work schedule is compiled where each stage is evaluated. This is good for the client as it provides a useful tool for monitoring and controlling the working process and ensures that work conforms to previously agreed timeframes.

EDISON uses the tried and tested “35–35–30” payment plan. These figures refer to percentages from the total cost of the project. Prepayment constitutes 35%, the client pays 35% upon receipt of the beta-version (usually a ready-to-use software solution) and then the remaining 30% is paid after all bugs and errors have been corrected during the trial and acceptance process.

Why do we ask for prepayment?


Software development is a complicated and highly-intellectual process and each party must be certain of the other's reliability and professionalism when cooperating on a project. Clients want a high-quality software product delivered on time and contractors want to be sure of their partners' stability, professionalism and financial responsibility.

All of the money requested before work begins on a project and after the beta-version of the software is ready is in fact, used to cover the cost of the development cycle. It is the final payment which represents the company's profit and this can only be received when the client is 100% satisfied with the end result.

This payment plan is identical to those used by most reliable, longstanding IT companies. Any company which readily agrees to post-payment for large or complex projects takes great risks upon itself and, thus, can't guarantee its long-term future. One client's inability to pay or poor judgment can then become a problem for the IT company's other clients. This is why we prefer to make sure of our partners' intentions and resources before assigning this or that specialist to a particular project. This proves to be in our mutual best interests as only a contractor in a financially stable position can guarantee a high-quality product that is delivered on time.

An exclamation mark in the circle

It isn't hard to measure our degree of competency: we can perform a sample test upon request, send copies of our official company documents, forward reviews, comments and contact details of our former and existing clients. EDISON may also take part in open tenders which allow the client to make an informed choice based on all of the offers available on the market.