The fine art of telling how much it’ll all cost
Communicating with potential new clients eats into your billable time - the time you could spend working on projects and earning money. Even worse, saying yes to the wrong client will cost you a lot of money, time, and patience.
That's why you need to screen potential clients, set the right budget expectations from the start, and take only the projects that are right for you.
Business development is a phase that happens before a project, the one where you have the first contact with a client. They tell you what they need, you tell them how much it’ll cost, and then you both negotiate. This first phase sets the course for the rest of your project. If you don’t do it right, the project won’t go right.
Everything starts with a client. They need something (say a new website) and they’re interested in hiring you. But first, they want to know much it'll cost.
After they tell you what they need, give them a ballpark figure. It doesn't have to be exact or detailed. Just say it looks like a $15k project but you'll need more details to get a more precise estimate.
The point is for the potential client to get over the sticker shock as soon as possible and anchor their expectations. Plus, if they're not comfortable with that range, you can both save time and money from pursuing a relationship that's not right. It'll also give the client time to reevaluate their budget and expectations.
If they say they understand, the window-shopper becomes a prospective client who’s worth your time. Now you can start thinking about the project and invest more time in the relationship.
You have a limited amount of time so you have to manage it carefully between working with leads and your existing clients. Think of it like managing long-term and short-term goals: one is more urgent that the other, but they're equally important; your job, besides working with the current client, is to keep the pipeline full and get be ready to jump on your next project.
A screener is the best way to quickly assess if both parties are right for each other. It's a set of questions you give to your prospective client to determine if you're the right fit for the job. You won't name it Client Screener, but something positive, like Project Assessment (which, by the way, also functions to screen clients).
In it, you ask:
- what the budget is and whether it’s approved,
- the timeline and goals of the project,
- and the requirements.
Based on their response, you'll know if you can take the project and can start devoting more of your (billable) time to pursuing the business.
It's perfectly reasonable to want to know client’s budget, not so you can say that number but so you can tell them what they can get for that money and guide them to an appropriate solution.
Once you know their goal and how many resources they can set aside for the project, you can tell them whether they can have all the bells and whistles their marketing team envisioned, or if something else would be more budget friendly (yet still aligned with their goals).
Giving an Estimate
You can then give them a general, item-by-item estimate, and explain the reason behind each item. An itemized quote tells a client that you're a pro and you didn't just pull a number out of thin air but that it was a deliberate decision which took a lot of thought.
It'll also help them come to terms with the price. A mechanic may tell you a price you find too high, but once they break down the cost (the cost of new parts and the hourly rate for their work), it all makes sense.
You don't have to create an estimate that’s too detailed. Just break down the project’s major parts and walk the client through. Highlight the benefit behind each cost and point out which ones are crucial and which ones are just nice-to-have. This will help your client prioritize their needs and set a budget they're comfortable with.
Some items, like the research, can't be removed because they're integral parts of the project and other items depend on them. Explain that with confidence and stand behind your quote. You have a good reason why you quoted that price and you have to show that.
Remember, they're not buying your time, they're buying work and value they have from it. You can make a site for $10k yourself, but you can't make $100k from it - but they can. That's what you charge for: the value they’ll get from your work.
Once you win the project, have a kickoff meeting to get a clearer idea of the scope of work, and create a detailed estimate that they'll sign off on. Keep in mind that the project scope is prone to change and your original estimate doesn't have to be the same as the final bill. That's why it's called an estimate. You'll have plenty of time to communicate with the client about additional work - and thus the billing - during the project.
Tips & Tricks
Beware of small jobs. Small jobs have the same overhead costs as the big jobs but come with a smaller budget and tighter deadlines. You'll have to set aside your attention and resources to work on them, but might not have the appropriate return on investment. Plus, what seems like a quick win almost always turns out needing more work - but the budget remains the same because, you know, it's just a thing you can quickly finish.
Prepare a 14-page document which outlines everything you do, plus give examples or links to sample work. You can even go a step further and tailor it to each client, giving them a teaser of what they can expect if they hire you. For example, SEO agencies do a quick keyword analysis and include it in the document; it takes them only a minute to analyze your website but it'll tantalize the client and make them want to know more.
When communicating with prospective clients, work in shifts with someone so you can respond promptly to each client message. Aim for an under 5 minutes response time. Timely communication is always important but do it this early and you'll score some major points.
Keep a one-page summary close at hand so you can send quickly to a client if they want to know what services you provide (and by implication, services you don't provide). It's like an offering card that sets clear boundaries of your work and clarifies the range of activities you are responsible for.
Call yourself a consultant and not a freelancer. When people hear "freelancer", they perceive your work and time as less valuable. Freelancers are perceived as staff augmentation: because a company has no long-term commitment to you, it's ok to give you the dirty jobs which will save them time and money. Consultants, on the other hand, enhance business and bring unique expertise that the company can't afford to hire full-time.
Present yourself as bigger than you really are. If you're a freelancer or a small team, register yourself as an LLC. This way, a client doesn't hire you, the person, but another business. To gain more credibility, some companies rent a virtual office in big cities like London so they can say they're UK based agency, even if most of their workforce is somewhere less glamorous.
When talking to a client, don't present yourself as the CEO. This puts you in a weaker negotiating position: you tell them they're so important that they get to talk to the boss. Instead, let a project manager communicate with the client under your supervision and get involved in the closing stage where you can better leverage your title.
Make it easy for a busy person to say yes when pitching to potential clients. Spend a few hours studying their business and create a document outlining every change you'd make to their website, for example. It's easier to clients to tweak the document and say "I want this and this, but not this" than to start from a blank page and think. Than you frame the discussion and don't talk about whether they should hire you, but what to hire you for. Be cautious though: this takes away from your billable time so this strategy works only if you don't have enough work and/or really want some client.
With that said, don't accept spec work before being properly commissioned and have a contract. If someone asks you to work for free (like it's actually a good thing for you), don't shy away from telling them how inappropriate their request is. Would they have the nerve to ask a lawyer or a maid to work for free? Respect your profession, stand up for yourself, and tell clients to refrain from proposing free work like it's an opportunity - the only opportunity any work should elicit is the opportunity to earn money and make a living.
The point of the initial phase is to get a feel of what type of client you're dealing with. If your gut tells you it's more trouble than it’s worth, you're free to turn down the proposal. You won't be the first one to do it and it's probably the best course of action for both parties. Explain that you're not the right person for the job and direct them to someone who is. There's no point in trying to fit a square peg in a round hole.