Lately I’ve been noticing more and more entrepreneurs with skewed expectations of the cost of software development of their SaaS or e-commerce ventures. These clients turn to services like Elance to find software development vendors — usually based in developing countries — proposing to create websites for pennies on the dollar of what a US developer would charge. “See, Tim,” they would say, pointing to a proposal to build a Facebook clone for $5k, “And you said I should expect to spend up to a hundred grand on development!”
Of course, the resulting product, if ever completed, is a disastrous, bug-ridden clunkfest that requires the client to spend more money fixing (assuming the client has any money left at this point) than would have cost to properly develop in the first place.
This is not to say that Elance and similar services do not have their place, but SaaS and e-commerce entrepreneurs should keep a few things in mind: