Demanding a Price

7 MIN READ
Posted By Chris Lema on

We’ve all been in the situation – more times than we care to talk about. The moment when we’ve heard a few details from a prospect about a project they’re considering hiring us for.

There’s not enough details to feel comfortable that we know everything they want. But there’s more than enough details to help us make tons of assumptions. The problem? Those assumptions often get us in trouble down the line.

Then the moment comes.

The person on the other side of the table, or the other end of the phone, asks you for a rough guess of what the project will cost.

Now, to be clear, at this point, it’s a bit like asking what a car costs.

Most clients can describe enough about the project that if it were a car, you’d say you knew they wanted four wheels, brakes, an engine, four doors and a body. But with that little information, there’s virtually no way to know if you’re going to be quoting a Honda Civic or Audi r8.

The Discovery Project

One way to solve the problem is to break it into two. In this way, you quote and charge for your time as you work together to investigate both the problem and solution space.

This is one of the most effective ways to also evaluate if you want to work with this kind of client because it gives you an opportunity to work together as you define requirements.

So when the person asks you what you think the project should cost – and you know there’s no way to know the answer – you quote them the cost of your time to help them with requirements analysis.

I’ve done discovery projects that take a week, and others that have taken 2 months. So there’s no direct answer about how you should price a discovery project. But the point is to make sure you charge for your time as you help them figure out a greater amount of details.

After all, this is a real service to them – even if you don’t choose to step into the next phase of the work (quoting the actual project). The service is to produce a finalized specification that they can take anywhere and get a much more realistic price.

So they say, “Now that we’ve told you about our project, what’s this going to cost?”

And you can respond with,

“I appreciate what you’ve shared so far, but I think there are still a lot of details to figure out. If I had to quote the project with what I know, I’m positive my estimate would be off. So instead, let’s do a Discovery Project where we work out more details and get ourselves a set of detailed expectations, requirements, and feature requests.”

But what if they just want a number?

As you undoubtedly know, some people don’t want to pay for a discovery project and they don’t understand why they can’t have a quote right away.

These are folks that think they’ve already told you all you need know to create a quote. They aren’t asking you to give them a final number; they just want a rough guess.

The problem with rough guesses is that they’re something people easily get anchored to. That first number you share might be the last number they think about or ever remember later.

Rough guesses also suck because in almost every case, they’re wrong. So they betray you and limit you from adjusting the price.

Structured Rough Guesses  - An Alternative to Discovery Projects

When that person asks you to give them a rough guess, and you know you don’t have enough details to properly quote the project, there’s an alternative.

 – articulating assumptions along the way – and pricing in the risk.

An Example:

As an example, imagine the prospect tells you they need a website for their band. They tell you about their style and their upcoming tour, along with a desire to send people to another site to buy CDs. That’s it.

Then they ask you for a rough quote.

You don’t know if they need a list of tour dates with details about each stop.

You don’t know if they need a page for each CD they’ve recorded (to promote it).

You don’t know if they need a newsletter sign up.

You don’t know if they need a blog.

There’s a lot you don’t know. But you can still give them an answer that won’t jeopardize you later, if they decide to work with you.

My Fast Approach to Ballpark Quotes

Pricing

When you assemble IKEA furniture, because you know you do it all the time, the first thing you see when you open up the instructions is a list of parts. Because if you don’t have the parts you need, the rest of the project is a waste of time.

So the strategy I use for fast “ballpark” quotes is to create my own “parts” list. This helps me do simple math.

Here’s how it works.

First I have a list of pre-defined parts:

  • Custom Post Types
  • Page Templates
  • Custom Widgets
  • Large Plugins
  • Custom Code

The first three are exactly what you think they are. The fourth just highlights how many different “significant” plugins I’ll likely use that will need time to configure. These are things like the form or membership plugins where time will be needed to get things working as I need them to.

Lastly, there’s custom code. This is, without question, the area where things will be especially ballpark-ish.

Step one...

is all about getting the counts of these parts. Just like when you look at those instructions to assemble furniture, they tell you not only which parts you’ll need, but also the quantity you should have of each.

_____ Custom Post Types

_____ Page Templates

_____ Custom Widgets

_____ Large Plugins

_____ Custom Code

Step two...

is where you’ll have to do your own work to make this make sense for you. It’s where I assign a “ballpark” figure for each of these line items.

The number has honestly nothing to do with the project and everything to do with you. Because you know how long things take you (which would be the lowest number you might put here) and how much value might be derived from each (which would be the highest number you would put here).

I try to keep the numbers easy so that I can do the math in my head.

_____ Custom Post Types   * $___________

_____ Page Templates         * $___________

_____ Custom Widgets        * $___________

_____ Large Plugins             * $___________

_____ Custom Code              * $___________

So in our example of a band site, I might conclude:

4 Custom Post Types * $500 each

3 Page Templates * $1000 each

4 Custom Widgets * $1000 each

1 Large Plugin * $2000 each

Some custom code * $3000

So when I’m done, I can look across the table and say that a ballpark number might be $15,000.

What I’m not saying

I’m not saying your number will be mine. Or that mine would be perfect.

I’m not even saying that you should do this every time. Or that it’s the right strategy.

Sometimes it can be very helpful to not give a number.

But sometimes you’re at a table with a person that won’t let you get up unless you drop a number, and when I’m in those situations, I need a simple way to do stuff in my head.

Pricing in Risk

The last part of any quote is to price in risk. And while that could be another whole topic or post, I’ll simply say that when I see any red flags, I treat them as multipliers.

So if the person who wants a band site tells me that they’re excited to get started and that things sound great, but may need me to integrate with a third-party for some feature – I hear risk. And then it’s my job to determine if that will add a 30, 50 or 100% “tax” to a project.

So tell me – when you’re pushed to give a number, do you do something like this, or do you have a different strategy?

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