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Category: Business Help

Quoting a price

When I first started my web design business I was building your average web site (HTML, DHTML, CSS, etc.). Now that I'm building more and more database driven web applications, I'm running into the classic 'scope creep' problem. My customers are asking for small things that are beyond the scope of the initial quote. By themselves these things are no big deal to add, but all together they amount to quite a bit of extra work. I'm sure this is not a new concept for most of you out there, but I think my problem is in my price quoting procedures.

I first meet with a prospective client to go over the basic requirements for their web site. After that initial meeting, I put together a quote and we meet again to discuss it. After the quote is accepted, I draw up a contract based on that quote. The problem is we don't work out the detailed requirements, functionality, and business logic until after the contract is signed, and that's the time I realize the quote is too low.

Obviously, if there was a formal Request For Proposal I would have much of that information up front. Unfortunately, most of my clients don't provide them. I guess my question is how do I get all the information needed to provide an accurate quote before the contract is signed. I can't imagine a client spending the time necessary to meet with me to go over the detailed requirements and business logic just to get a bid.

Does anyone have any suggestions for a better procedure? I would appreciate any advice. Thanks.

Is it in the contract that any changes to the original scope of work might affect the price?

The problem is we don't work out the detailed requirements, functionality, and business logic until after the contract is signed, and that's the time I realize the quote is too low.
if this is the case, only provide a rough estimate. And request 50% or whatever you need down. And let them know that this will be applied to the total amount when done.

In the contract, make sure that it spells out $1,000 is an estimate & not the total cost. The $1,000 might be lower or higher as the work goes on. Plus before the contract is signed - try to finalize the scope of work. I do one or two of these a week. once you get more under your belt - you will be better at writing all of this out & see more additions to the scope as you go along.

I do require 50% up front and state that changes and additions may affect the price, so I'm covered legally. But, I find it hard to say something is out of scope and charge the client extra when it's usually the business logic and not additional requirements that's making things more complicated than I originally estimated.

But your saying I should provide a bid, and after it's accepted by the client, work out the detailed requirements and business logic before drawing up the contract. Then base the final price on that. This does make sense. Thanks!

Do you find that your clients go along with this process easily? It seems to me that some will think of it as a kind of bait and switch tactic where you give them an estimated price and when they decide to go with you there is another step where the price will more than likely increase.

Thanks for your help, Corey.

Actually I won't even give them a quote until I start a scope of work. As for the reasons you have pointed out. This way - it makes them feel special & they feel that they are the only client at that time. Once I get the basics down & go over it with them - I ask them - if there is anything else that you want the site to do.

For example - we mainly build custom shopping carts. So I have a generic one that I send to them with their name. They (75% of the time) e-mail or call me to tell me that is exactly what they want. I verify. They say yes. And I say OK - I was only asking because I did not know if you wanted to offer an affiliate program or maybe a coupon/discount program. They usually tell me yes - they would like the coupon program. I then tell them OK - I can add that in. And then I repeat. Maybe add something else. I do not want to or try to make them feel stupid, but I want them to think what they want in their cart. They then usually spend a day or two on the web looking at other carts. They e-mail me & tell me to add in this or that. And then once it is over - they get a quote.

I might have wasted my time, but normally the customers all appreciate the extra step that I go to to help them understand a bit about their website.

I am definitely going to have to agree with Corey here. The customers will notice the extra time you are taking up front and that will play into their minds big time. I also spend more time up front to try and work out most of the little things before I quote, and definitely before a contract is signed. But there will always be little things that come up.

I have taken the approach that I give potential clients 1 hour of my time to discuss their projects. At that point, before they sign a project agreement, I offer them assistance as a consultant, in helping them define their project. For the opportunity I discount my hourly rate by 25%-50% for up to 3 hours' help. During that time I provide high-value advice on the best way to scope and design their project. At the end I have written their RFP for them - they always use my firm for the work, but the agreement reflects the RFP's scope. They are also much more web-saavy by then.

This way there are several advantages:

* Client demonstrates good faith and seriousness.
* Developer demonstrates genuine desire to help them succeed.
* Developer gets chance to show off proj. mgmt. skills.
* Developer gets basic expenses met.
* Developer is not taken advantage of.

I have found that if a client isn't willing to pay the discounted rate for help in scoping their project, then they are going to be TROUBLE down the road.

I have taken the approach that I give potential clients 1 hour of my time to discuss their projects. At that point, before they sign a project agreement, I offer them assistance as a consultant, in helping them define their project. For the opportunity I discount my hourly rate by 25%-50% for up to 3 hours' help. During that time I provide high-value advice on the best way to scope and design their project. At the end I have written their RFP for them - they always use my firm for the work, but the agreement reflects the RFP's scope. They are also much more web-saavy by then.

This way there are several advantages:

* Client demonstrates good faith and seriousness.
* Developer demonstrates genuine desire to help them succeed.
* Developer gets chance to show off proj. mgmt. skills.
* Developer gets basic expenses met.
* Developer is not taken advantage of.

I have found that if a client isn't willing to pay the discounted rate for help in scoping their project, then they are going to be TROUBLE down the road.

I am new to doing this as a business but this is the approach that I take. You might even compose a questionnaire for clients to help them figure what they need. From that you could prepare your estimate.