Your business is great. You’ve invented something better than sliced bread. You offer such an amazing service at such a great price that people should be knocking your door down.
And they might be. But they’re all asking for a proposal.
Proposals are a fact of life. We all do them, and we’re all trying to blow our prospects away.
But most proposals are bad. Here are 10 reasons why proposals fail:
1. They’re too long. Proposals aren’t meant for “shock and awe” - don’t try and overwhelm the prospect into submission. Edit and cut. Cut and edit. There’s no perfect length for a proposal, but how many of your prospects really read the whole thing? They scan and skim till they get to the price and timeline. Keep it short.
2. They don’t reference the prospect’s pain. Why did the prospect ask you for a proposal? You better have a crystal clear answer to that question. Too many proposals don’t reiterate the pain properly. Skipping that makes the prospect feel like you don’t get it.
3. They’re too technical. I know you’re the expert in your field, that’s why I asked for a proposal. You don’t need to inundate your proposal with buzzwords and industry-hooey. A prospect only knows a smidge of what you know about your business, and they don’t really want to know more. Your proposal fails when it sells industry mastery using language I won’t understand.
4. They’re not selling benefits. Proposals that miss out on #2 and focus too much on #3 invariably aren’t selling benefits. If you’re not selling benefits you’re sunk. And for the love of everything that is holy, spell these out as clearly as possible.
5. They’re not well structured. Proposals are stories. And every story has a beginning, middle and end. Think of your proposal as a story and write it accordingly.
6. They’ve got spelling and grammatical problems. A proposal with spelling errors is unacceptable, it’s as simple as that. Grammatical problems may be harder to catch. Three tips: Read it out loud. Write short sentences. Have someone else read it.
7. They’re poorly formatted and packaged. Style counts! On top of that, your proposal isn’t the only game in town. You want to stand out right? Take some time to format things nicely. Add some pictures. Use bigger headers, smaller paragraphs, and color where appropriate. Think jazzy. If you’ve got substance, sell it with nice packaging.
8. They’re missing testimonials and client references. I’ve rarely seen a proposal with testimonials or client references. It makes no sense. Pepper in a few testimonials to spice it up and add a feeling of success. Add in some client references with contact information to give your prospect a clear message, “you know what you’re doing and you can prove it.”
9. They’re missing a thank you. Proposals are personal. You’re not writing installation instructions for IKEA furniture are you? Unless you’re sending a proposal unsolicited (which makes little sense) someone’s given you that opportunity. Thank them for it.
10. There’s no call to action. You submit the proposal. Now what? Um…um…um…oops. Put in a crystal clear call to action. It could be a follow-up meeting, contract signature, or something else — it almost doesn’t matter. What’s important is that there is a next step and you’ve explicitly told the prospect what it is.
Your business rocks. You work hard. You deserve more business.
Don’t let proposals get in the way. Do them right and you’ll win a lot more business.
Wednesday, March 4, 2009
How to Build Strong Relationships with Your Customers
Treat them like people.
* Don’t think of a customer as a disconnected voice on the phone.
* Don’t think of a customer as a waste of time.
* Don’t think of a customer as a pain in the ass.
* Don’t think of a customer as an open checkbook.
You will always have difficult, frustrating, stressful and downright rude clients. They’re people remember? And some people are just like that. But…
The quicker you can turn the relationship from client to vendor into person to person the quicker you’ll be successful with that client and future ones.
Find ways to open the lines of communication, meet on common ground and share interests.
Always react professionally, calmly and respectfully. Feel free to say what you think is best, what you think is right, but always maintain a tone of professionalism.
Get to know them, and the environment in which they work. Understand the motives behind their behaviors.
Losing sight of a customer as a person is going to lose you that customer. And, get jaded from bad experiences with customers, and you could lose more than just a customer or two…your business could be in peril.
Customers are people. Find out who they really are.
* Don’t think of a customer as a disconnected voice on the phone.
* Don’t think of a customer as a waste of time.
* Don’t think of a customer as a pain in the ass.
* Don’t think of a customer as an open checkbook.
You will always have difficult, frustrating, stressful and downright rude clients. They’re people remember? And some people are just like that. But…
The quicker you can turn the relationship from client to vendor into person to person the quicker you’ll be successful with that client and future ones.
Find ways to open the lines of communication, meet on common ground and share interests.
Always react professionally, calmly and respectfully. Feel free to say what you think is best, what you think is right, but always maintain a tone of professionalism.
Get to know them, and the environment in which they work. Understand the motives behind their behaviors.
Losing sight of a customer as a person is going to lose you that customer. And, get jaded from bad experiences with customers, and you could lose more than just a customer or two…your business could be in peril.
Customers are people. Find out who they really are.
3 Easy Ways to Treat Your Customers Right
It’s simple really: Happy customers will buy more from you and tell more people about you. You want customers buying more and telling more people about you. You want happy customers.So how do you get happy customers?
* Treat them well.
* Respect them.
* Be honest.
* Respond quickly.
* Be open and accessible.
This is all common sense. But common sense isn’t terribly common, is it?
Here are three stories that demonstrate how easily companies can take basic steps to keeping customers happy for life.
1. Turn your customers into advocates. Andy Sernovitz tells the story of Coffee Cup Software which has a list of 100 customers on its site that anyone can contact for information about the company. I don’t know how the company chose these 100 customers, but it doesn’t matter; they’re giving you unfettered and easy access to them.
2. Customer Relationship Management = Huge Long Tail Profits? Andrew Wee has a couple great examples of how he’s been treated by various financial institutions. Citibank sent Andrew a personalized cake for his birthday. What did the other 6 or 7 banks/trading companies he uses send him? Nothing. It’s so easy to send personalized, quality gifts and “thank yous” to customers, it just takes a bit of creativity and time. And the will.
3. You Don’t Even Have To Go An Extra Mile My own story of buying a gift. The cashier took a bit of extra time to make sure I was treated well, and had a great shopping experience. He didn’t have to bend over backwards; he just paid attention to what was going on and made sure I’d remember how pleasant it was to shop at that store.
It really doesn’t take much to treat customers well.
But you have to recognize the value. And then you have to be willing to take a bit more time, get a bit more creative, push a bit further…
It’s well worth it. Treating customers well is the path towards increased customer loyalty, word-of-mouth and business success.
I Love Customers
Customers are great. If you don’t think so, you’ll never succeed. Surprisingly, a lot of people consider their customers to be “the enemy” or a nuisance they’re forced to deal with.
Just remember that customers:
* pay the bills
* provide good feedback
* find bugs you’ll never find on your own
* use your product in new ways (which can result in new opportunities)
* recommend your product/service to others
* serve as references
Without customers you don’t have a business. It’s as simple as that.
And the key to everything I’ve listed above is having happy customers. Unhappy customers do none of the above. In fact, they do quite the opposite. And that’s bad. (I’m trying to be plain spoken and clear about this!)
The simplest way to have happy customers is through customer support. Of course building a product they want to use is a necessity - but you don’t even have to get that right out of the gate if you’re providing killer customer support.
Customer support isn’t complicated but it is demanding and time consuming. It requires fast response times, courteous replies and decisive action. Luckily for you, very few companies (especially startups!) provide anything remotely resembling quality customer support and so you can immediately use it as a differentiator.
And that’s really the key — leveraging great customer support into a differentiator.
This is especially true for startups. You might not think a startup has the time and wherewithal to focus on customer support, but it’s an absolute necessity. Invariably your product will be rough around the edges, bugs will emerge and there will be a shortage of features. On top of that, you’re the new kid on the block, so customers may look at you with a bit of concern (especially in a B2B market.) “How long will they last?” “Can they really provide the level of product quality and service we need?” To assuage those concerns, and balance against the shortcomings of an early product, use great customer support.
Doing so will increase the likelihood of good things happening (see the list above if you need a reminder.) Customer support can be a strong differentiator if you maintain it at exceptional levels, because you can be sure others won’t bother. They don’t recognize the value. And they’re losing business because of it.
Just remember that customers:
* pay the bills
* provide good feedback
* find bugs you’ll never find on your own
* use your product in new ways (which can result in new opportunities)
* recommend your product/service to others
* serve as references
Without customers you don’t have a business. It’s as simple as that.
And the key to everything I’ve listed above is having happy customers. Unhappy customers do none of the above. In fact, they do quite the opposite. And that’s bad. (I’m trying to be plain spoken and clear about this!)
The simplest way to have happy customers is through customer support. Of course building a product they want to use is a necessity - but you don’t even have to get that right out of the gate if you’re providing killer customer support.
Customer support isn’t complicated but it is demanding and time consuming. It requires fast response times, courteous replies and decisive action. Luckily for you, very few companies (especially startups!) provide anything remotely resembling quality customer support and so you can immediately use it as a differentiator.
And that’s really the key — leveraging great customer support into a differentiator.
This is especially true for startups. You might not think a startup has the time and wherewithal to focus on customer support, but it’s an absolute necessity. Invariably your product will be rough around the edges, bugs will emerge and there will be a shortage of features. On top of that, you’re the new kid on the block, so customers may look at you with a bit of concern (especially in a B2B market.) “How long will they last?” “Can they really provide the level of product quality and service we need?” To assuage those concerns, and balance against the shortcomings of an early product, use great customer support.
Doing so will increase the likelihood of good things happening (see the list above if you need a reminder.) Customer support can be a strong differentiator if you maintain it at exceptional levels, because you can be sure others won’t bother. They don’t recognize the value. And they’re losing business because of it.
10 Tips for Picking a Great Freelance Vendor
The pros and cons of freelancing are fairly well known. And freelancers have no shortage of stories about bad clients. But what about bad freelancers? Does such a thing exist? Of course it does. And there’s no worse feeling than paying someone a lot of money to do work for you only to have them screw it up or bail on you completely.
So what can a client do in a situation where the vendor screws up?
Honestly, not much. Certainly you should stop paying them, but recovering money already spent will be extremely difficult. The best option is to tell everyone you know about the bad experience and lousy vendor. Negative word of mouth (especially if you blog about it publicly) can put a real dent in a freelancer’s future, and it might spur them into action.
Hopefully, it never gets to that point, because if it does the results are never pleasant. Publicly humiliating people is unpleasant (even if it generates results), and no matter what, you’re likely to get screwed out of money and your project.
The best defense against bad freelance vendors is to pick them carefully.
When selecting vendors you have all the control. You can ask for as much information as you want. You can do as much research as you want. You hold most if not all of the cards, so it’s up to you to use them.
1. Get referrals. The best way to find a good vendor is through a referral. If a friend or trusted colleague recommends someone to you, that’s worth a ton. Having said that, don’t take the referral at face value and leave it at that. Do your own research. The person referring a freelancer to you may have different standards. But the best place to start when looking for a freelancer is through your own network.
2. Forget about the lowest price. Generally, you scrap the lowest bid that comes in for your project. (Often people suggest you scrap the highest bid as well, and go for something in the middle.) The lowest bidder may be a good vendor, but it’s a warning sign. You have to ask yourself, “Why are they lower than everyone else?” The answer doesn’t really matter (and it’s not worth trying to figure out), so just thank them and move on. Price is a critical component of picking a freelancer, but if it’s the most important point, you’re in big trouble already.
3. Ask freelancers to explain their price. It doesn’t really matter how a freelancer is pricing the project, you have a right to more details. This is especially true when the project has a fixed price. The vendor will give you a number - $10,000 - but what does that really mean? Ask the vendor to break it up on a deliverable-by-deliverable basis. Or they may have another structure (work, project management, profit, etc.) … it doesn’t matter, you just want to know. Vendors often don’t like doing this because of how they estimating the price of projects (often very poorly) and it requires more effort and leads to more debate on the minutiae of the pricing, but for the client it can be very worthwhile.
4. Get references. One of your most effective weapons against crappy freelancers is to check references. Freelancers will give you their best ones (of course), so it’s up to you to ask good questions of them to get real information. Find out how the vendor reacted under stress. Find out how effective the vendor was as a communicator. Find out if they ever blew any deadlines, and what they did about it. Don’t be shy when probing for information from references. And always ask these two questions: “Would you hire the vendor again? And, would you recommend the vendor to others?”
5. Hunt down your own references. Nothing says you can only speak to the references a vendor gives you. Why not find others? Presumably the vendor has a portfolio; so look up those clients and reach out to them without the vendor’s knowledge. You may find some surprises.
6. Leverage social networking. There’s a very good chance the freelancers you’re looking at are using Facebook, LinkedIn and other social networking services. At minimum you should be doing a Google search and hunting around for information on them. Then dig a bit deeper and look for them on social networking sites.
7. Test them on smaller projects. If possible, give a freelancer something small but time-sensitive to do first. It might be a small piece of the bigger project, or something else completely. Test them. It’s a small test, but it’s better than doing nothing. You want to see if they deliver the goods, on time and on budget. You want to assess their communication and operational skills. You want to build a relationship with the freelancer to see if you’ll gel.
8. Spread payments out. There are very few reasons you should have to pay everything upfront. Break up the payments based on deliverables, with some amount upfront. The bigger the project, the more you can chunk up the payments. On smaller projects you can go 50-50 (50% due at the start, 50% due at the end), but most often I prefer 33-33-33 or 25-25-25-25. Of course that works well on fixed price projects. For hourly projects, you can pay based on milestones or at certain time intervals (i.e. every 2 weeks.) And make sure payment is due on your acceptance of delivered work not on the simple delivery of something (which may be crap!)
9. Define the working arrangement. How you communicate and manage the project with your vendor is critical for its success. So, define those terms early on. For example, do you want to make sure the vendor is available via Skype or another online chat tool? Do you expect weekly status reports? Do you want regular face-to-face meetings? How is the vendor expected to deliver the project? Think about the mechanics of the relationship and get agreement on those details as quickly as possible.
10. Hire multiple vendors. On bigger projects consider hiring multiple vendors. This comes with its own challenges — having them work together, integrating work from different people, etc. — but it can mitigate the risk of one vendor totally ruining your project. Try and compartmentalize the work they have to do, so it doesn’t require a lot of integration. If the vendors have to work together, try and get them in a room together and make sure communication is strong.
Picking a great vendor is definitely a challenge.
You may not be able to follow all of the steps above. What happens if you can’t find a referral, for example?
Do your homework. Research potential vendors and freelancers as much as you can. Demand whatever you want from them, because it’s your money and project on the line. The sooner you weed out lousy vendors, the better. And, by going through a rigorous selection process you give yourself the best chance of success. Freelancers may grumble and groan at the amount of effort needed to close the deal, but if it’s a good fit and they really want the work, they’ll do what’s needed to make sure you’re comfortable with them.
So what can a client do in a situation where the vendor screws up?
Honestly, not much. Certainly you should stop paying them, but recovering money already spent will be extremely difficult. The best option is to tell everyone you know about the bad experience and lousy vendor. Negative word of mouth (especially if you blog about it publicly) can put a real dent in a freelancer’s future, and it might spur them into action.
Hopefully, it never gets to that point, because if it does the results are never pleasant. Publicly humiliating people is unpleasant (even if it generates results), and no matter what, you’re likely to get screwed out of money and your project.
The best defense against bad freelance vendors is to pick them carefully.
When selecting vendors you have all the control. You can ask for as much information as you want. You can do as much research as you want. You hold most if not all of the cards, so it’s up to you to use them.
1. Get referrals. The best way to find a good vendor is through a referral. If a friend or trusted colleague recommends someone to you, that’s worth a ton. Having said that, don’t take the referral at face value and leave it at that. Do your own research. The person referring a freelancer to you may have different standards. But the best place to start when looking for a freelancer is through your own network.
2. Forget about the lowest price. Generally, you scrap the lowest bid that comes in for your project. (Often people suggest you scrap the highest bid as well, and go for something in the middle.) The lowest bidder may be a good vendor, but it’s a warning sign. You have to ask yourself, “Why are they lower than everyone else?” The answer doesn’t really matter (and it’s not worth trying to figure out), so just thank them and move on. Price is a critical component of picking a freelancer, but if it’s the most important point, you’re in big trouble already.
3. Ask freelancers to explain their price. It doesn’t really matter how a freelancer is pricing the project, you have a right to more details. This is especially true when the project has a fixed price. The vendor will give you a number - $10,000 - but what does that really mean? Ask the vendor to break it up on a deliverable-by-deliverable basis. Or they may have another structure (work, project management, profit, etc.) … it doesn’t matter, you just want to know. Vendors often don’t like doing this because of how they estimating the price of projects (often very poorly) and it requires more effort and leads to more debate on the minutiae of the pricing, but for the client it can be very worthwhile.
4. Get references. One of your most effective weapons against crappy freelancers is to check references. Freelancers will give you their best ones (of course), so it’s up to you to ask good questions of them to get real information. Find out how the vendor reacted under stress. Find out how effective the vendor was as a communicator. Find out if they ever blew any deadlines, and what they did about it. Don’t be shy when probing for information from references. And always ask these two questions: “Would you hire the vendor again? And, would you recommend the vendor to others?”
5. Hunt down your own references. Nothing says you can only speak to the references a vendor gives you. Why not find others? Presumably the vendor has a portfolio; so look up those clients and reach out to them without the vendor’s knowledge. You may find some surprises.
6. Leverage social networking. There’s a very good chance the freelancers you’re looking at are using Facebook, LinkedIn and other social networking services. At minimum you should be doing a Google search and hunting around for information on them. Then dig a bit deeper and look for them on social networking sites.
7. Test them on smaller projects. If possible, give a freelancer something small but time-sensitive to do first. It might be a small piece of the bigger project, or something else completely. Test them. It’s a small test, but it’s better than doing nothing. You want to see if they deliver the goods, on time and on budget. You want to assess their communication and operational skills. You want to build a relationship with the freelancer to see if you’ll gel.
8. Spread payments out. There are very few reasons you should have to pay everything upfront. Break up the payments based on deliverables, with some amount upfront. The bigger the project, the more you can chunk up the payments. On smaller projects you can go 50-50 (50% due at the start, 50% due at the end), but most often I prefer 33-33-33 or 25-25-25-25. Of course that works well on fixed price projects. For hourly projects, you can pay based on milestones or at certain time intervals (i.e. every 2 weeks.) And make sure payment is due on your acceptance of delivered work not on the simple delivery of something (which may be crap!)
9. Define the working arrangement. How you communicate and manage the project with your vendor is critical for its success. So, define those terms early on. For example, do you want to make sure the vendor is available via Skype or another online chat tool? Do you expect weekly status reports? Do you want regular face-to-face meetings? How is the vendor expected to deliver the project? Think about the mechanics of the relationship and get agreement on those details as quickly as possible.
10. Hire multiple vendors. On bigger projects consider hiring multiple vendors. This comes with its own challenges — having them work together, integrating work from different people, etc. — but it can mitigate the risk of one vendor totally ruining your project. Try and compartmentalize the work they have to do, so it doesn’t require a lot of integration. If the vendors have to work together, try and get them in a room together and make sure communication is strong.
Picking a great vendor is definitely a challenge.
You may not be able to follow all of the steps above. What happens if you can’t find a referral, for example?
Do your homework. Research potential vendors and freelancers as much as you can. Demand whatever you want from them, because it’s your money and project on the line. The sooner you weed out lousy vendors, the better. And, by going through a rigorous selection process you give yourself the best chance of success. Freelancers may grumble and groan at the amount of effort needed to close the deal, but if it’s a good fit and they really want the work, they’ll do what’s needed to make sure you’re comfortable with them.
How To Price Freelance Projects Successfully
One of the biggest challenges for new freelancers is pricing.
Pricing projects isn’t easy. There are plenty of factors that come into play:
1. How long will the project take?
2. How clear are the client’s requirements?
3. How well do you know the client?
4. How likely are they to stay on course?
5. How likely are you to get future work from them?
6. How experienced are you on these types of projects?
7. How valuable is the project to you?
8. How valuable is the client to you?
9. How busy are you with other work?
And then you also have to decide how to charge: hourly, fixed price or on retainer? Or a combination?
Estimate Project Lengths as Accurately as Possible
Estimating how long a project will take is the key to pricing it well. If you can’t estimate the length of a project you’ll never come up with a fair price, and more than likely you’ll end up losing.
You can consider an endless number of factors when estimating a project, including some of the questions I’ve listed above. For example, if you’ve done many similar types of projects, you’ll have a better idea of how long the new one will take. If you’ve worked with the client in the past, you know their tendencies and can anticipate pitfalls.
No matter what you do, always add a buffer.
It doesn’t matter if you’ve worked with the client before, know exactly what the client wants, and have done the same thing a thousand times before. Buffer it.
The size of the buffer you use is up for debate, but I’d generally increase your time estimate by 15-30%.
If you have to increase it much more than that because of concerns you have over the project (i.e. fuzzy guidelines, sketchy client, etc.) then reconsider the project completely because it could end up biting you in the rear.
Projects almost always take longer than you expect, so buffer your estimates each and every time.
Whether you choose to charge for that buffered time estimate is a different story, but generally, I would recommend that you do so. And clients should expect that to be the case.
Bad Clients
Such a thing exists. I’d wager that every freelancer has experienced a bad client or two. And the first warning signs will appear when you’re pricing projects for them.
The warning signs of a potentially bad client include:
* Wishy washy requirements.
* Poor communication skills.
* Unwillingness to follow early recommendations you have.
* Unwillingness to answer questions about the project’s budget.
* Always trying to undercut.
* Unwillingness to pay something upfront.
* Constantly promising bigger and better.
These indicators aren’t absolutes. But keep an eye out for them anyway. On the last two points, I’d add the following:
1. Always get money upfront. Especially from new clients. Stick with a simple structure: 50% upfront, 50% upon completion of the project, or 33% upfront, 33% midway (agree on this point in the project before), and 33% at the end.
2. Be wary when clients promise lots and lots of future work. I realize this sounds very pessimistic on my part. I am a huge fan of building long-term relationships with clients (one off clients aren’t the most rewarding or profitable!) But, if a client is “bribing” you to lower your price because they’ve got “tons of work in the pipeline” be very, very careful. Even if they do have a lot of upcoming work, once you’ve set a price for the first project it’s going to be hard to raise that price later on.
How Should You Charge: Hourly, Fixed Price or Other?
I’ve always been flexible on this, adjusting my pricing approach on a project-by-project basis. Generally, I prefer fixed price projects, and so do clients, because they have the clearest sense of what the cost will be. You can also buffer fixed price projects better, because you’re not asked to justify every hour in your estimate (nor should you have to.)
Fixed price projects also help you manage your own finances - you’ll have a clearer sense of what revenue is coming in and when.
Even with a fixed price project, you’ll need to base it off an hourly rate (even if you don’t reveal the hourly rate to the client.) So it helps to have a sense of what the going rate is in your industry.
I’m a big fan of retainer projects. Most retainer projects are monthly. They’re great because of the consistent revenue and the ability to build long-term, positive relationships with clients.
When Should You Negotiate Price?
Everything is negotiable. But you should know your own parameters and conditions for negotiation. When are you comfortable negotiating price, and why? Some things to consider:
* Your current and upcoming workload. The busier you are, the higher your prices should go. It’s really as simple as that. Having said that, even if you’re desperate for work, be wary of dropping your prices too far. You don’t want to look cheap, and you’ll have a hard time bringing those prices up, later on.
* Name recognition of the client. You may consider lowering your price because having the client on your client list is a real win. And truth be told, big companies negotiate just as hard as small companies on price, even if they have the budget — they also have the power. There is something to be said for name recognition, but don’t put too much weight on it.
* Profile of the project. A high profile project that will generate a lot of buzz could be valuable, but make sure the project will be high profile amongst your targeted prospects. Otherwise, your return on investment (i.e. taking a lower price) will be minimal.
* The “fun” factor. No one wants to work on boring projects, but freelancers do it all the time to pay the bills. Some freelancers even call that work their “bread and butter.” Then a fun project comes along and they’re willing to slash their prices to do it. I must admit, out of all the reasons you might lower your price, this is one of the better ones.
* The “cause” factor. When a project has real meaning - a “higher cause” or purpose - you might decide to reduce your rates. After all, a little good karma never hurt anyone…
Ultimately, you have to decide how flexible you want to be with your pricing. Be careful about negotiating too much — if you drop your price 30% or more from the original estimate (without the project scope changing in parallel) it might look like you were trying to price gouge before, or you could end up losing money. You lose money on freelance projects when you book yourself too cheaply and can’t make more money on other projects and opportunities that come your way. If you do a project for 6 months and earn $5 you’re losing money, because you could have and should have been earning much more.
Pricing projects isn’t easy. There are plenty of factors that come into play:
1. How long will the project take?
2. How clear are the client’s requirements?
3. How well do you know the client?
4. How likely are they to stay on course?
5. How likely are you to get future work from them?
6. How experienced are you on these types of projects?
7. How valuable is the project to you?
8. How valuable is the client to you?
9. How busy are you with other work?
And then you also have to decide how to charge: hourly, fixed price or on retainer? Or a combination?
Estimate Project Lengths as Accurately as Possible
Estimating how long a project will take is the key to pricing it well. If you can’t estimate the length of a project you’ll never come up with a fair price, and more than likely you’ll end up losing.
You can consider an endless number of factors when estimating a project, including some of the questions I’ve listed above. For example, if you’ve done many similar types of projects, you’ll have a better idea of how long the new one will take. If you’ve worked with the client in the past, you know their tendencies and can anticipate pitfalls.
No matter what you do, always add a buffer.
It doesn’t matter if you’ve worked with the client before, know exactly what the client wants, and have done the same thing a thousand times before. Buffer it.
The size of the buffer you use is up for debate, but I’d generally increase your time estimate by 15-30%.
If you have to increase it much more than that because of concerns you have over the project (i.e. fuzzy guidelines, sketchy client, etc.) then reconsider the project completely because it could end up biting you in the rear.
Projects almost always take longer than you expect, so buffer your estimates each and every time.
Whether you choose to charge for that buffered time estimate is a different story, but generally, I would recommend that you do so. And clients should expect that to be the case.
Bad Clients
Such a thing exists. I’d wager that every freelancer has experienced a bad client or two. And the first warning signs will appear when you’re pricing projects for them.
The warning signs of a potentially bad client include:
* Wishy washy requirements.
* Poor communication skills.
* Unwillingness to follow early recommendations you have.
* Unwillingness to answer questions about the project’s budget.
* Always trying to undercut.
* Unwillingness to pay something upfront.
* Constantly promising bigger and better.
These indicators aren’t absolutes. But keep an eye out for them anyway. On the last two points, I’d add the following:
1. Always get money upfront. Especially from new clients. Stick with a simple structure: 50% upfront, 50% upon completion of the project, or 33% upfront, 33% midway (agree on this point in the project before), and 33% at the end.
2. Be wary when clients promise lots and lots of future work. I realize this sounds very pessimistic on my part. I am a huge fan of building long-term relationships with clients (one off clients aren’t the most rewarding or profitable!) But, if a client is “bribing” you to lower your price because they’ve got “tons of work in the pipeline” be very, very careful. Even if they do have a lot of upcoming work, once you’ve set a price for the first project it’s going to be hard to raise that price later on.
How Should You Charge: Hourly, Fixed Price or Other?
I’ve always been flexible on this, adjusting my pricing approach on a project-by-project basis. Generally, I prefer fixed price projects, and so do clients, because they have the clearest sense of what the cost will be. You can also buffer fixed price projects better, because you’re not asked to justify every hour in your estimate (nor should you have to.)
Fixed price projects also help you manage your own finances - you’ll have a clearer sense of what revenue is coming in and when.
Even with a fixed price project, you’ll need to base it off an hourly rate (even if you don’t reveal the hourly rate to the client.) So it helps to have a sense of what the going rate is in your industry.
I’m a big fan of retainer projects. Most retainer projects are monthly. They’re great because of the consistent revenue and the ability to build long-term, positive relationships with clients.
When Should You Negotiate Price?
Everything is negotiable. But you should know your own parameters and conditions for negotiation. When are you comfortable negotiating price, and why? Some things to consider:
* Your current and upcoming workload. The busier you are, the higher your prices should go. It’s really as simple as that. Having said that, even if you’re desperate for work, be wary of dropping your prices too far. You don’t want to look cheap, and you’ll have a hard time bringing those prices up, later on.
* Name recognition of the client. You may consider lowering your price because having the client on your client list is a real win. And truth be told, big companies negotiate just as hard as small companies on price, even if they have the budget — they also have the power. There is something to be said for name recognition, but don’t put too much weight on it.
* Profile of the project. A high profile project that will generate a lot of buzz could be valuable, but make sure the project will be high profile amongst your targeted prospects. Otherwise, your return on investment (i.e. taking a lower price) will be minimal.
* The “fun” factor. No one wants to work on boring projects, but freelancers do it all the time to pay the bills. Some freelancers even call that work their “bread and butter.” Then a fun project comes along and they’re willing to slash their prices to do it. I must admit, out of all the reasons you might lower your price, this is one of the better ones.
* The “cause” factor. When a project has real meaning - a “higher cause” or purpose - you might decide to reduce your rates. After all, a little good karma never hurt anyone…
Ultimately, you have to decide how flexible you want to be with your pricing. Be careful about negotiating too much — if you drop your price 30% or more from the original estimate (without the project scope changing in parallel) it might look like you were trying to price gouge before, or you could end up losing money. You lose money on freelance projects when you book yourself too cheaply and can’t make more money on other projects and opportunities that come your way. If you do a project for 6 months and earn $5 you’re losing money, because you could have and should have been earning much more.
14 Tips for Moving From Full-Time to Freelance Work
Leaving a full-time job to become a freelancer can be very scary. It can also be extremely exciting and rewarding.
It’s not always the most obvious transition. There’s a lot to learn and do when setting yourself up as a freelancer.
You will make mistakes. There will be hiccups along the way. But as long as you’re prepared for those stumbles and missteps, you’ll end up succeeding.
The biggest challenge for a freelancer is first “setting up shop”. You decide it’s time to strike out on your own, and you put the proverbial sign on the door — “I’m open for business.” But now what?
There are a number of things you should do before you launch your freelance career, and shortly thereafter. Here’s a collection of 14 tips to help you:
1. Get work from your past employer. This happens more than you might realize; someone leaves their day job but brings contract work with them from the employer. It’s a great way to get started quickly in your freelancing career. Your employer might be upset that you’re leaving, but they’ll also appreciate your willingness to stay on as a freelancer. It saves them the hassle of replacing you immediately (or ever), and can be cost beneficial to them as well.
2. Get endorsements from your past employer and co-workers. If you’re leaving your job on good terms, there’s no reason you can’t ask for endorsements. It’s the kind of thing employees rarely do for themselves (although the functionality exists for you to do so very easily through sites like LinkedIn), but as a freelancer you will rely heavily on word-of-mouth and other people’s recommendations.
3. Pick the right time to make the switch. You should think strategically about the perfect time to start your freelance life. Do you know when your target market of clients spends money? Don’t make the jump to freelance work five minutes after all your prospects’ budgets are set for the year…
Are there big projects at work you should finish first to get good endorsements and future work from your soon-to-be ex-employer? Do you have money saved, to handle potential downturns?
You can jump into the freelance fire with both feet without paying attention to the environment around you, but it will be much more effective and profitable if you time the move carefully.
4. Don’t incorporate, but learn about business structures. There’s no reason to incorporate a company immediately (and you might never have to), but you owe it to yourself to understand the various business structures and how they differ. Christine Kane suggests that you incorporate as a business, which can make a lot of sense once you’ve settled in.
5. Find a good accountant. Regardless of your business structure, find a good accountant. You’re now entering the realm of tax deductions, business expenses and other “fun” stuff. You want to maximize your tax deductions, and I can guarantee you that at the beginning you’ll be missing opportunities. Beyond tax deductions, a good accountant can help you setup a financial tracking system; what you need to track, how it needs to be tracked, etc. They can also make sure you don’t run afoul of any tax laws.
6. Research market prices. You may already have a sense of what to charge customers, be it on a per project or hourly basis, but it’s always worthwhile to find out what everyone else is charging as well. If you have enough colleagues in your industry it shouldn’t be hard to find out. Of course, what you do with that information is the big question - do you charge the same, lower or higher?
7. Register your name as a domain name. Part of being a freelancer is developing your personal brand and raising your profile. You want people to know your name and associate your name with the work you do. So if possible, register your name as a domain: benyoskovitz.com or bobsmith.com. Even if you don’t put anything up there, at least redirect it to wherever your Internet presence lives.
8. Start a blog. If you’re not already blogging, you should. It’s the single best way to raise your profile and attract opportunities. You need to demonstrate your authority and expertise in your field. You need to be connecting with others in your industry, potential partners and clients. You need to be “out there.” So get blogging. If you’re already blogging, I would re-examine your efforts, and see where you can improve your blog’s value to your freelance business.
9. Setup a good home office. Your work environment will be essential to your success. Setup a comfortable, well-organized space that you’ll want to work in on a daily basis. You’ll be spending a lot of time in your office (more than the amount of time you spent at your day job’s office), so take the time and spend the money to do it right. Comfort is key, but so is the efficiency of the space; Is there enough filing? Do you have the right supplies? Is everything easily accessible? Etc.
10. Get out of your office! You just setup the perfect working environment, so now it’s time to get out of there. And fast. And often. One of the biggest pitfalls for new freelancers is spending too much time on their own. This gets worse when clients are remote; there’s almost no reason to leave the office. But the isolation can be difficult to handle, especially if you’re used to an active work environment from past jobs. Make the effort to meet people in-person, whether they’re clients, prospects, vendors, others in your industry, or other freelancers.
11. Learn about sales and marketing. One of the biggest challenges for freelancers is sales and marketing. For most of us it’s not something we did in our previous careers, but now we’re thrust headfirst into bringing deals through the door. Hopefully you get plenty of business through referrals and word-of-mouth, which reduces the sales and marketing burden. But if you abhor sales and marketing, then freelancing is much more difficult.
12. Find helpful tools, but don’t go overboard. There’s no shortage of helpful software and productivity tools out there for freelancers. But you don’t want to spend too much time on the tools to make your business click; you haven’t really got a business yet! Better yet, focus on being productive and getting yourself into a routine. And find resources out there that can bring in business versus help you stay organized on business you don’t have yet.
13. Tell everyone about the switch. When you make the move from day job to “all the time job” (which is exactly what being a freelancer means: You’re almost always “on”), tell the world. If you can stand on a tall building with a megaphone, do it. Of course, don’t blame me if you’re arrested…The goal of course, is to let people within your network know that you’ve made the change. You never know who might be able to bring you work once you’ve told your immediate friends and family, shared the news on Facebook, Twitter and LinkedIn, etc.
14. Get inspired. It’s all up to you now. No co-workers. No boss (excluding your clients — the phrase “working for myself” is rather inaccurate and shortsighted.) No one to blame. It’s just you, yourself and you. That means a lot more responsibility. It means a lot more discipline and many more challenges on the horizon. So get inspired. And stay inspired. If you hit a slump at your day job, you can probably skirt by without too many repercussions. But lose motivation and interest as a freelance and you can find yourself in serious trouble.
At the end of the day, the move from full-time to freelance is a challenging one. Until you’ve done both (separately and at the same time) you can’t fully appreciate the pros and cons, issues and anxieties that come with freelancing. Don’t panic. Be prepared, and think long term, because you won’t find the answers in a day or two. Freelancing is a skill and art that takes time to master.
It’s not always the most obvious transition. There’s a lot to learn and do when setting yourself up as a freelancer.
You will make mistakes. There will be hiccups along the way. But as long as you’re prepared for those stumbles and missteps, you’ll end up succeeding.
The biggest challenge for a freelancer is first “setting up shop”. You decide it’s time to strike out on your own, and you put the proverbial sign on the door — “I’m open for business.” But now what?
There are a number of things you should do before you launch your freelance career, and shortly thereafter. Here’s a collection of 14 tips to help you:
1. Get work from your past employer. This happens more than you might realize; someone leaves their day job but brings contract work with them from the employer. It’s a great way to get started quickly in your freelancing career. Your employer might be upset that you’re leaving, but they’ll also appreciate your willingness to stay on as a freelancer. It saves them the hassle of replacing you immediately (or ever), and can be cost beneficial to them as well.
2. Get endorsements from your past employer and co-workers. If you’re leaving your job on good terms, there’s no reason you can’t ask for endorsements. It’s the kind of thing employees rarely do for themselves (although the functionality exists for you to do so very easily through sites like LinkedIn), but as a freelancer you will rely heavily on word-of-mouth and other people’s recommendations.
3. Pick the right time to make the switch. You should think strategically about the perfect time to start your freelance life. Do you know when your target market of clients spends money? Don’t make the jump to freelance work five minutes after all your prospects’ budgets are set for the year…
Are there big projects at work you should finish first to get good endorsements and future work from your soon-to-be ex-employer? Do you have money saved, to handle potential downturns?
You can jump into the freelance fire with both feet without paying attention to the environment around you, but it will be much more effective and profitable if you time the move carefully.
4. Don’t incorporate, but learn about business structures. There’s no reason to incorporate a company immediately (and you might never have to), but you owe it to yourself to understand the various business structures and how they differ. Christine Kane suggests that you incorporate as a business, which can make a lot of sense once you’ve settled in.
5. Find a good accountant. Regardless of your business structure, find a good accountant. You’re now entering the realm of tax deductions, business expenses and other “fun” stuff. You want to maximize your tax deductions, and I can guarantee you that at the beginning you’ll be missing opportunities. Beyond tax deductions, a good accountant can help you setup a financial tracking system; what you need to track, how it needs to be tracked, etc. They can also make sure you don’t run afoul of any tax laws.
6. Research market prices. You may already have a sense of what to charge customers, be it on a per project or hourly basis, but it’s always worthwhile to find out what everyone else is charging as well. If you have enough colleagues in your industry it shouldn’t be hard to find out. Of course, what you do with that information is the big question - do you charge the same, lower or higher?
7. Register your name as a domain name. Part of being a freelancer is developing your personal brand and raising your profile. You want people to know your name and associate your name with the work you do. So if possible, register your name as a domain: benyoskovitz.com or bobsmith.com. Even if you don’t put anything up there, at least redirect it to wherever your Internet presence lives.
8. Start a blog. If you’re not already blogging, you should. It’s the single best way to raise your profile and attract opportunities. You need to demonstrate your authority and expertise in your field. You need to be connecting with others in your industry, potential partners and clients. You need to be “out there.” So get blogging. If you’re already blogging, I would re-examine your efforts, and see where you can improve your blog’s value to your freelance business.
9. Setup a good home office. Your work environment will be essential to your success. Setup a comfortable, well-organized space that you’ll want to work in on a daily basis. You’ll be spending a lot of time in your office (more than the amount of time you spent at your day job’s office), so take the time and spend the money to do it right. Comfort is key, but so is the efficiency of the space; Is there enough filing? Do you have the right supplies? Is everything easily accessible? Etc.
10. Get out of your office! You just setup the perfect working environment, so now it’s time to get out of there. And fast. And often. One of the biggest pitfalls for new freelancers is spending too much time on their own. This gets worse when clients are remote; there’s almost no reason to leave the office. But the isolation can be difficult to handle, especially if you’re used to an active work environment from past jobs. Make the effort to meet people in-person, whether they’re clients, prospects, vendors, others in your industry, or other freelancers.
11. Learn about sales and marketing. One of the biggest challenges for freelancers is sales and marketing. For most of us it’s not something we did in our previous careers, but now we’re thrust headfirst into bringing deals through the door. Hopefully you get plenty of business through referrals and word-of-mouth, which reduces the sales and marketing burden. But if you abhor sales and marketing, then freelancing is much more difficult.
12. Find helpful tools, but don’t go overboard. There’s no shortage of helpful software and productivity tools out there for freelancers. But you don’t want to spend too much time on the tools to make your business click; you haven’t really got a business yet! Better yet, focus on being productive and getting yourself into a routine. And find resources out there that can bring in business versus help you stay organized on business you don’t have yet.
13. Tell everyone about the switch. When you make the move from day job to “all the time job” (which is exactly what being a freelancer means: You’re almost always “on”), tell the world. If you can stand on a tall building with a megaphone, do it. Of course, don’t blame me if you’re arrested…The goal of course, is to let people within your network know that you’ve made the change. You never know who might be able to bring you work once you’ve told your immediate friends and family, shared the news on Facebook, Twitter and LinkedIn, etc.
14. Get inspired. It’s all up to you now. No co-workers. No boss (excluding your clients — the phrase “working for myself” is rather inaccurate and shortsighted.) No one to blame. It’s just you, yourself and you. That means a lot more responsibility. It means a lot more discipline and many more challenges on the horizon. So get inspired. And stay inspired. If you hit a slump at your day job, you can probably skirt by without too many repercussions. But lose motivation and interest as a freelance and you can find yourself in serious trouble.
At the end of the day, the move from full-time to freelance is a challenging one. Until you’ve done both (separately and at the same time) you can’t fully appreciate the pros and cons, issues and anxieties that come with freelancing. Don’t panic. Be prepared, and think long term, because you won’t find the answers in a day or two. Freelancing is a skill and art that takes time to master.
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