How likely is it that you can create 0 software bugs?
A contract programmer told us, "For years, my client has aimed for 0 bugs on every software release. However we can't control the bugs that closely. Now the client has come out with an idea of charging me a penalty—a cost refund as much as 3% per bugs from what I charge them. What can I do?"
First of all, stop calling them “bugs.” They are not independently reproducing life forms. They are made by us humans, and there are no perfect humans.
Next, listen to what experienced S/W developers will tell you. Perfect software is a myth, an illusion.
But suppose you did produce a piece of zero-error software. How would you know that’s what you had? I’ve known software that was thought to be error-free for 30+ years, then an error turned up. Are they still going to be charging you penalties thirty years from now?
Quite simply, perfect software violates the Second Law of Thermodynamics. Then, too, software that might be perfect yesterday can become imperfect because of changes in the world today.
But, if they want to charge you for errors detected in software you built, that’s okay. What you need to do is charge them more for the software to begin with, to account for what you will eventually have to pay back. Just set a time limit—maybe a year or so, or until someone else modifies the code. And be sure you have an agreed definition of what constitutes an “error.”
This is not a simple question. I’ve written at least two books on the subject, and ultimately they don't cover every possible variation. But at least give your client a copy of the books so you can begin your negotiation with some intelligent information, not just myths and illusions: