The Delicate Art of Budget Discussions
Switching gears from my latest newsletter series on business video production, it’s time to look at a much broader issue — the many potential challenges that people face when engaging others to help them with various aspects of their businesses. These aspects could include projects to design software, Web sites, video, literature, manuals, instruction — you name it.
You yourself may be ready to outsource a variety of business-building activities or tasks to outsiders (to be covered in a future issue). On the opposite side of the coin, you or your business might provide services or custom solutions to clients (today’s newsletter topic).
One of the challenges of being a service or custom solution provider is broaching the subject of prices and budgets, especially when you’re just beginning to work with a new client. If the services you perform tend to vary from project to project, you may find it difficult on occasion to provide a realistic estimate for that first effort.
I plan to experiment with different ways of using this blog in combination with my original newsletter format. For now, I hope you enjoy today’s newsletter features, including “5 Ways to Finesse New Client Projects.” Do you have any comments or suggestions? Please be sure to leave them below!
April 12th, 2008 at 9:25 am
I’m a new visitor, and found the article linked in here to be very timely. The difficult part for me, though, is the estimating process that leads to a comfortable time/dollar amount to begin negotiations with. Can you provide some insight on the various methods of estimating a task?
April 16th, 2008 at 11:02 am
Hi Adele,
You bring up common situations and your suggestions are practical and useful to me.
The “introductory package” is like something I do when estimating a project with several elements (say brochure, bizcard, letterhead, postcard…). I set it up like a menu, with a list of the elements or project phases and time/cost. The client chooses some or all of them, depending on what they really want and can afford. The choice of salad or buffet is theirs.
The “test sample” technique is another great idea. I used to be swept up in wanting to see a project through, carrying on past the client’s ability to pay if that’s what it took to see it through. Now I know better, but must remind myself to value my time even if a client doesn’t.
The “range of options” alternative is something I never really understood. The idea has been presented to me that clients can pick two: good, fast or cheap. That sorta makes sense, except that I never do less than my best. Truly, quality is not negotiable. For clients, budget and deadlines are usually fixed. Meaning I had to stuff my quality into their limitations. Now I understand that it’s about prioritizing between three important factors in any project: time, scope, budget. If time and budget are fixed, then scope may have to decrease so that I can deliver a quality product. Maybe all I can do in the given time and budget is a mock-up, but it will be well done.
I personally am cautious about the “share of results” method because I’m not willing to work on someone else’s idea at my expense. I have a bunch of projects I want to do for my own business. I will always encourage someone else’s great idea, but it would have to satisfy an important personal goal for me as well to work for a share of profits. Too often people looking to build a portfolio have accepted this kind of deal and found they were valued as much as they charged: zero.
Thanks for the great post on budget discussions, Adele! I’ve learned a few things over the years about getting paid properly for my work, but your ideas have refined my thinking and will help my practice.
Terre
April 16th, 2008 at 11:26 am
Terre — thank you so much for your experienced insights into this topic! So many of my clients and subscribers are anxious to compare notes on how others go about budget discussions, and you’ve given some great points of comparison. Some approaches may be particularly effective in certain applications, and others may not be ideal at all, but fortunately, we do have some options to choose from!
My next article will review my favorite estimating techniques, including the “schedule, cost, quality, and features” trade-offs you so beautifully touched on. I welcome your comments on that next installment.
Thanks again!
Adele
April 29th, 2008 at 8:32 pm
Adele -
Thank you so much for your April 17th newsletter with its review of estimating strategies! It definitely gave me a number of ideas to work with. Along a different line, I noticed in one your other posts that you were planning to discuss outsourcing in a future article. Did you mean that you’ll be discussing the issues surrounding the migration of jobs out of country? I am personally tired of hearing that topic, but would be interested in hearing a reasoned discussion of migrating non-core tasks out of a company and into the surrounding community.
Thanks in advance -
April 30th, 2008 at 8:56 pm
Hey, Colorado!
I appreciate your following up to let me know your thoughts on the estimating article. I’ve written other articles that go into greater depth on estimating, posted on my Newsletter Index (see the “Recommended Links” in the sidebar).
Thanks also for your thoughts on outsourcing — yes, that can be a loaded subject! I understand why it’s a sensitive issue, especially where technology jobs are being shipped “offshore.” But around the world, many countries are experiencing the exact same thing as the U.S., so “offshore” can mean something different to everyone.
Stay tuned, and I will try to offer a “reasoned discussion.” I look forward to more conversation!
My best,
Adele