In 2013, Mike Lemovitch had an idea for an iPhone app called Santa Dispatch. Within the app, kids could create a list to tell Santa about the good deeds they'd done. He mocked up the design in Photoshop and created a general navigation map. To bring his idea to fruition, he posted the job on Elance and took bids from freelance developers.
Lemovitch received bids ranging from $200 to $1,000. He settled on an $800 bid from an overseas developer because the developer came across well on Skype. The $800 was split into four $200 milestone payments, and development got underway.
Within two weeks, during which the developer demanded early payments as well as additional payments outside their agreement, the developer finished Santa Dispatch. The developer then promised Lemovitch he'd receive his source code--after he left the developer a 5-star Elance review-- and then proceeded to keep the code.
"I'm breaking out of the jail that is have-to-hire-someone," Lemovitch posted on The Next Web after finally taking possession of the functioning app and its source code. "Next time around, I'll be able to bring my idea to life without worrying so much about increasing costs and code being held hostage."
When Low-Cost Outsourcing Works
Elance no longer exists. It merged with outsourcing competitor oDesk to create a new freelancing site called Upwork. However, Upwork provides the same service: connecting entrepreneurs and project managers with freelancers.
Entrepreneurs trying to outsource repetitive, simple work, such as data entry or easy research, will get decent results at a low price from Upwork, but cheap freelancers can get ugly when projects get complex or the initial assignment is open ended.
Bidding sites like Upwork drive project pricing down to the bottom. As a result, freelancers used to securing good rates find themselves undercut by competitors who offer bare-bones bids. As a result, good freelancers go elsewhere, or they bid for projects requiring only minimal effort.
App development is a complex task, period. Developers run into obstacles, designers want to swap graphics and projects run over time and budget. Often, developers underbid for an Upwork project because they expect straightforward work. When inevitable course corrections happen, many start asking for unscheduled payments, change the terms of the agreement or hold the source code for ransom.
Some race-to-the-bottom developers intentionally operate in a shady manner, but many don't. They realize midway through the project that they undervalued their work, and they try to demand more. The contract, however, is already signed. Their resentment, with nowhere else to go, ends up poisoning the project and the client relationship.
Warning Signs: How to Avoid Developer Nightmares
Working with freelancers can provide entrepreneurs with outstanding work while cutting the middleman costs of hiring an agency. To get more of the reward while minimizing the risk, entrepreneurs should think twice about freelance app developers who match these profiles:
The No History, No Portfolio
Entrepreneurs themselves are often newbies in their industry, and they feel empathy for people without lengthy work experience. Unfortunately, betting on a stranger with no longevity and no portfolio isn't compassionate: it's just really bad for business.
Freelancers with no work history, no verifiable references and no app portfolio are too great a risk for cash-strapped start ups. Entrepreneurs realize this when they're writing a check to a second, more expensive developer who has to fix what the cheap one did wrong.
The Bargain Basement Worker
App developers who respect themselves expect a decent payday, and a good rate for them is also good for entrepreneurs. Good developers charge enough so they can afford to focus deeply on a few projects instead of racing to finish as many low-budget jobs as possible.
Instead of choosing developers based solely on price, entrepreneurs should choose someone with a solid portfolio, good references, and a passion for app development. The ideal developer is someone with whom a start up can build a long-term relationship, not someone who underbids a one-off project.
The Friend of a Friend
Anyone who has done a home remodeling project knows that no good deal starts with the words, "I have a friend who…" In app development, the situation gets dicier when the so-called developer is related to the friend or--worst case scenario--is the friend's college kid who messes around with software development in his or her spare time.
Unless the friend is a proven developer with a strong portfolio and additional references, it's best to stick to a professional referral, not a referral from a buddy. Entrepreneurs have stressful lives, and they need to lean on personal relationships, not burn them with sorry business deals.
The Overseas Freelancer
Overseas developers with an established firm and work history often provide great work for relatively cheap prices. Hiring an overseas freelancer, however, comes with enormous risks, especially if the freelancer isn't recommended by someone who understands app development.
On one hand, Mike Lemovitch got a bargain. He received a functional app from an overseas freelancer within two weeks and uploaded to the App Store for $800. On the other hand, the experience left him with such a sour taste he decided to develop his next apps alone.
Mike Lemovitch doesn't need to become a developer. He needs to start paying for developers who value their work. He learned what too many entrepreneurs learn the hard way: There's a price to pay for being cheap.
Be wise, visit lolay.com today for more information on the best practices of app development.