November 23, 2011

Guidelines for project pricing

Rules

  1. Projects under $1,000 are paid in full before work begins
  2. Hourly rates are preferred to project pricing
  3. If the project was misrepresented, refund and reapproach
  4. Negotiate scope, not price
  5. Save time by including a next step in every email

Projects under $1,000 are paid in full before work begins

This is a great way to avoid being held hostage by scope creep.

While it may be different for you, this number represents a little over a days work, which means it should be a relatively quick and painless project. I used to do a 50% deposit and 50% on delivery, but I found myself running into a lot of “Oh, I forgot to mention…” scenarios where additional features are requested and the final payment was withheld as a result. By taking the full deposit initially, you can re-approach any additional requests at a fairly valued rate, rather than have to cram them into an existing budget.

Projects over $1,000 would require a contract, and are a different story entirely.

Hourly rates are preferred to project pricing

There is some debate in terms of hourly rates vs project pricing, but for small projects, there are very few situations where I would feel comfortable with a fixed project price.

All quotes are hourly, this avoids being stuck with hours of unexpected QA beyond what was intended. If you are on a project price and their site code is a mess, you risk facing the “you touched it last, I hired you to make this work on my site, so you need to handle it” moment.

When integrating with their existing site, there is a risk being presented with unusable code which could add to time needed – or worse, be viewed as a problem you caused. For this reason, I always keep original copies of the pages I edit in case they need to be referenced later in the project, regardless of whether or not the client has their own backups.

If the project was misrepresented, refund and reapproach

This should happen the moment you realize you are not looking at what you expected, before you do any work. I have had scenarios where I was expecting to integrate with a static website, only to find it is WordPress and the expectation is that I create a custom plugin to work with an existing format. In most cases, thorough questioning and a clear scope could avoid this scenario, but you can never account for what clients view as”standard” and therefore fail to mention in your email exchanges.

When this happens, I alert the client and offer a refund, unless they wish to allocate additional hours. I typically get a “thank you for being up front with me” or a “there’s no way I’m paying for that, it’s not what we talked about”.

You win some, you lose some, but the important part is that it’s not your job to make the original hour estimate if it requires more work than anticipated.

Negotiate scope, not price

“I’m a startup with limited funding and am not looking for anything fancy – I just need this one simple thing…”

This line really only serves one purpose, it communicates that they are budget-minded, which means if the costs exceed what they were hoping for, it’s time to negotiate scope. It’s your job to inform them of the costs for the project, and if you’re so inclined, potential options within their budget.

Your hourly rate and time spent do not get discounted as a result – wanting more than you can afford is not a problem that falls onto the vendor. Outside the world of service based companies, it would be laughable if a BMW salesman was faced with a person would really “needed” a BMW, but could only afford a Mitsubishi. These debates should not happen and are a waste of time, if you have a simpler alternative, offer it, otherwise give yourself the luxury of declining the project.

Save time by including next steps in every email

Whenever possible I try to include as many questions and actionable items in the initial exchange with a new contact. Often I’ll receive a vague scope, which requires some clarification, but I still make an attempt to quote if possible. If I have a simpler or alternate way of approaching a project, I am sure to include that as an option as well – part of your job is to educate.

“If you meant the following… then it would be X hours. If this is not what you are aiming to do, then could you clarify…”

Giving the potential client a sample of your rates early on helps you avoid a series of project scope emails, only to find out they aren’t on the same page cost-wise.

What Are Your Rules?

While this list is entirely based on my own experiences, I’m curious what sorts of rules you have established for small projects. I’ll look forward to hearing what you folks have as guiding principles in the wonderful world of client work.

How To's , Project Management # ,
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