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  1. #1
    ********* Articles ArticleBot's Avatar
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    Article Discussion

    This is an article discussion thread for discussing the SitePoint article, "Step-By-Step Guide to a Signed Contract"

  2. #2
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    Cool!

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    Ubuu: Well done on the most pointless post on sitepoint. You should get an award for it.

    As far as the article goes - it's an interesting point being spelt out that the most important thing in securing a customer is their perception of you. It should be obvious I guess, but this geos into detail on some key points.

    Also obviously alot of this applies to business in general, not just websites. Shows how marketing is king in getting customers, now how good you are at your particular craft.

  4. #4
    English Bob
    SitePoint Community Guest
    Focusing on fear hey.. shzz now wonder the world is in such a state when there are such manipulative people around. What happened to an honest approach? If some dipstick pays well over the odds because some smarmy salesman brown noses their way into the cheque book, more fool them. I'd say watch out to anyone thinking of purchasing a website from these people.

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    "Don't Charge by the Hour..."

    At the end of the article, I was a bit surprised to read Brendon's advice not to charge by the hour. First, lots of other professionals do it, so why should web designers be different?

    Second, as a practical matter, if you're new in the business, it may be very difficult to estimate a lump sum fee. Quote too high a figure and you may lose the job. Quote too low a figure and you may lose your shirt. If you work honestly at an agreed-upon hourly rate, it seems to me to be fair to both sides.

    And not only can there be difficulty in making an estimate, it's not uncommon for the scope of work to change once you get started. The client may have failed to inform you of certain expectations or technical requirements. Or the client might want changes mid-stream (many times even!). Of course, you can amend a contract, but that seems like extra work and extra negotiations.

    So, can someone explain why is it a bad idea to do work on an hourly basis?

    Dave S.

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    SitePoint Guru MG315's Avatar
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    Quote Originally Posted by DavidSalahi

    So, can someone explain why is it a bad idea to do work on an hourly basis?

    Dave S.
    because when you work at an hourly rate, the final amount is unknown.

    Imagine you are a small business owner and you hire someone by the hour to develop a website. you expect it to cost $200 to $500 max. You get the final bill and its $7,000. You will be a little suprised to say the least


    when you give a lump sum - even if its more than the time you will spend - the client knows exactly how much he will be spending.

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    No Hourly Billing?

    Quote Originally Posted by MG315
    because when you work at an hourly rate, the final amount is unknown.
    But how is that different from a lawyer, a civil engineer or an accountant who all bill hourly?

    Granted, you can't just say "it's $100 an hour until the job is done." You need to give them some ballpark estimate. E.g., you can give them examples of comparable sites you've done and tell them how much each of those cost.

    Dave S.

  8. #8
    SitePoint Guru MG315's Avatar
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    Quote Originally Posted by DavidSalahi
    But how is that different from a lawyer, a civil engineer or an accountant who all bill hourly?

    Granted, you can't just say "it's $100 an hour until the job is done." You need to give them some ballpark estimate. E.g., you can give them examples of comparable sites you've done and tell them how much each of those cost.

    Dave S.
    The aforementioned people provide a service, and (in the eyes of the client) you are providing a product. When you are done there is a website.

    I've tried the hourly plan and it doesnt work well. A client wanted me to develop the website but wasn't sure of the details when we started. he wanted to "figure it out as we go." I told him its impossible for me to quote for a project if he doesn't tell me what I'll be doing, so we agreed to do it by the hour. After the first month we had finished the concept designs and coded the home page. We sent the end-of-month invoice and he fired us. He said we charged too much.

    Hourly rates, while they sound like the panacea of project quoting, don't usually work. Besides, it leaves litte room for profit. If I developed a CMS for one client and spend 20 hours building it from scratch and charged him $1000 (20 hrs @ $50/hr) and then I get another client who needs one, how do I price that? It might only take 2 hours to customize it, but should I really charge 10x less for the same product?

  9. #9
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    Quote Originally Posted by MG315
    The aforementioned people provide a service, and (in the eyes of the client) you are providing a product. When you are done there is a website.
    Yes, but you don't always get "done." Web site design can also be seen as a service just as the work of designing a subdivsion can be seen as a service. (Or it could be seen as a product: a set of maps.)

    A web site is different from a book or a car in that it is often continually updated and enhanced. In such a case, it's hard to see how you could bill for ongoing development without charging for your time.

    Quote Originally Posted by MG315
    I've tried the hourly plan and it doesnt work well. A client wanted me to develop the website but wasn't sure of the details when we started... After the first month we had finished the concept designs and coded the home page. We sent the end-of-month invoice and he fired us. He said we charged too much.
    I would suggest that the problem was a lack of communication. If the client had a good idea of the time required when starting out, he would not have been surprised when the invoice came. Of course, the fact that the client was unclear would have made it hard to give him a good time estimate. But in that case, how could you possibly have quoted him a cost for the entire site?

    Quote Originally Posted by MG315
    If I developed a CMS for one client and spend 20 hours building it from scratch and charged him $1000 (20 hrs @ $50/hr) and then I get another client who needs one, how do I price that? It might only take 2 hours to customize it, but should I really charge 10x less for the same product?
    I didn't mean to suggest that hourly is always the best way to go. I just wondered why Brendon advised never to do it. And I still wonder...

    Dave S.

  10. #10
    Thinking! Lord Brar's Avatar
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    I just wondered why Brendon advised never to do it. And I still wonder...
    Dave! Its all about charging premium pricing from your client...

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    SitePoint Enthusiast yodaddy's Avatar
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    Most of the things that this article's author regards as selling points for winning customers are WAY beyond the capabilities of freelance designers.

    I would expect this kind of approach from Ceonex or the like, but come on, the majority of web designers here do not even own a nice leather brief case. Let's get real!

    Also, as per this quote: "I disagree 100% that skill and talent are the requirements for success in anything. The perception of those things is more than a little important, too. The designers we were up against may well have been better than my team. They may have more skills. They may be better qualified. But it doesn't matter. The client only wants to know that you can do the job and that there is no risk involved in employing you.

    We convince the client that we are the better people for the job by convincing him to perceive us as expert, reliable and safe."

    Sounds like to be successful in this person's eyes a slight con is necessary. Reeks of used-car salesman. I'd rather sleep at night a poor respectable person than a rich con artist.

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    SitePoint Guru hurtdidit's Avatar
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    I'm not sure what Brendon is suggesting is anything close to scamming. In fact, the ethics of it are besides the point; what he is talking about is what he finds to be the most effect means of closing a sale.

    Is sending a card unethical? Rewarding the referrer with a bottle of wine? No, this is all uncommon courtesy, and it DOES work.

    Brendon wrote in his book that people will buy from someone they LIKE, period. That person may not necessarily be the best-qualified, nor the best educated, but that's besides the point. It's human nature, really.

    Think about it in extreme terms: who would you hire to build your website (all other things being equal); the guy who has an MIS degree, ten years of experience in his field, but is an arrogant jerk who shows up for meetings late and won't even bother to thank you or shake your hand; or the fellow who dropped out of school, has five years of experience, but shows up to meetings on time, thanks you for the business, and sends you a card after every meeting?

    "A small group of thoughtful people could change the world.
    Indeed, it's the only thing that ever has." --Margaret Mead

  13. #13
    SitePoint Wizard johntabita's Avatar
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    Quote Originally Posted by DavidSalahi
    I didn't mean to suggest that hourly is always the best way to go. I just wondered why Brendon advised never to do it. And I still wonder...
    I don't know if this is Brendon's reason, but to put it simply: it's because you want the client to pay you for producing a result, not for the time it takes you to create the website.

    There are a number of reasons that you'd want this:

    1. When you are paid by the hour, your income will always be limited to how many hours you can physically work. Why should you assume the risk of being self-employed, along with the burden of having to find people to hire you, only to allow yourself to be paid as if you were an employee?
    2. If you want to be valued for your expertise and be well-paid for what you do, then you need to position yourself as the decision-maker's peer. (People you would pay by the hour are typically considered subordinates, not peers.) To become the decision-maker's peer, you must speak his language, one of results; and hourly billing emphasizes activity, not results.


    Quote Originally Posted by yodaddy
    Also, as per this quote: "I disagree 100% that skill and talent are the requirements for success in anything. The perception of those things is more than a little important, too. The designers we were up against may well have been better than my team. They may have more skills. They may be better qualified. But it doesn't matter. The client only wants to know that you can do the job and that there is no risk involved in employing you.

    We convince the client that we are the better people for the job by convincing him to perceive us as expert, reliable and safe."

    Sounds like to be successful in this person's eyes a slight con is necessary. Reeks of used-car salesman. I'd rather sleep at night a poor respectable person than a rich con artist.
    This seems sleasy because it sounds like you're manipulating the client's perception that you are trustworthy, regardless of whether you really are or not. There is a vast difference between what I'm talking about and "convincing" someone to "perceive" you as an expert. I think it's better to demonstrate by your actions that you are an expert (by talking about results rather than activity) and allowing the client to draw his own conclusions (perceptions) about you. This way, the end result is the same, and you still are able to sleep at night.

    Quote Originally Posted by hurtdidit
    Brendon wrote in his book that people will buy from someone they LIKE, period. That person may not necessarily be the best-qualified, nor the best educated, but that's besides the point. It's human nature, really.

    Think about it in extreme terms: who would you hire to build your website (all other things being equal); the guy who has an MIS degree, ten years of experience in his field, but is an arrogant jerk who shows up for meetings late and won't even bother to thank you or shake your hand; or the fellow who dropped out of school, has five years of experience, but shows up to meetings on time, thanks you for the business, and sends you a card after every meeting?
    It depends. Shaking my hand and sending me cards may make you more likable, but does it really instill confidence that you are the best-qualified? I can't remember their name, but there is a firm that treats clients like the arrogant jerk you've described. They tell them to "butt out" of the decision-making process, claiming that "they know best" when it comes to web strategy. Their clients included J-Lo, Puff Daddy and Sony. They fired Sony and Puff Daddy, but Puff Daddy eventually "came back around" so they took him back. I don't know how "likable" this firm was, but obviously their clients do trust them.

    I have to disagree with the notion that people buy from people they like. I think they buy from people they trust. To quote from a great book on sales, "the idea that someone won't buy from you unless you have the type of chemistry that creates lifetime best friends is ludicrous. If you want to make 'chemistry' irrelevant, simply be honest."

  14. #14
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    Quote Originally Posted by johntabita
    1. When you are paid by the hour, your income will always be limited to how many hours you can physically work. Why should you assume the risk of being self-employed, along with the burden of having to find people to hire you, only to allow yourself to be paid as if you were an employee?
    2. If you want to be valued for your expertise and be well-paid for what you do, then you need to position yourself as the decision-maker's peer. (People you would pay by the hour are typically considered subordinates, not peers.) To become the decision-maker's peer, you must speak his language, one of results; and hourly billing emphasizes activity, not results.
    These two explanations make a lot of sense. This way of working does require more work up front to make sure that the web designer has a clear understanding of the scope of work. This, of course, assumes that the client's requirements are clear enough to allow for such an understanding and it requires the web designer to clearly communicate to the client what to expect as a finished product. And it requires the designer to communicate clearly what the client's responsibilities are to provide content, etc.

    And it seems that even when an initial design (or redesign) is completed per specifications, there may well be a second phase or ongoing maintenance. So, to continue the relationship would require another package product description with all the required communication.

    Personally, this seems to add a layer of overhead and administration that I'm not sure I'm ready for. As someone who is just starting out as a freelance web designer, I think I would prefer a more flexibile business relationship. And there are plenty of professionals who charge hourly but still command respect.

    Dave S.

  15. #15
    SitePoint Wizard johntabita's Avatar
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    Dave,

    What it requires is that you take a consultive sales approach (help prospect verbalize what he really wants, determine what must increase/decrease to accomplish that, define what "success" will look like, and present your proposed solution).

    As far as adding a layer of overhead and administration, on the contrary. I find that it simplifies the entire process tremendously and shortens the sales cycle. On the last job I closed, the time from inital contact to check-in-hand was about 14 days.

    I met with another prospect yesterday. I was able to go through this process with him and reach a verbal agreement to do business in an hour-and-a-half. (I could have done it in less time, but he likes to talk.) In that entire time, the word "proposal" was never mentioned. This means I'll save valuable time by writing the proposal to document the verbal agreement we've already reached -- instead of writing it beforehand, waiting for him to review it, and running the risk of him rejecting it. Does that make sense?

    Rather than adding a layer of overhead, think about how much time you'll save by only writing proposals that you know will be accepted. This process allows you to do just that.

    As far as being someone who is just starting out, now's the best time to learn to sell like a professional. The other option is to figure it out as you go, but at best, even though your work may be professional, your sales process won't be. I wish I had known this 5+ years ago when I first started. We made a lot of mistakes and wasted a lot of time that could have been avoided.

  16. #16
    nightfireWeb
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    the operative word is "professional".

    Business suit, nice leather briefcase, fountain pen, 24-carat good manners.

    this isn't as depthy a comment as john and dave but as a longtime commissioned salesman i can tell you, look like a successful business person and people will treat you like one, at least for starters.

  17. #17
    perfect = good enough peach's Avatar
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    Very interesting analyses of "fear and greed" based consumption. Its not your skills that are the most important but your ability to convince prospects of your qualities.

  18. #18
    SitePoint Wizard realestate's Avatar
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    Interesting and funny. Like a movie. I don't approve or value that kind of approach but I can imagine how successful it would be.

  19. #19
    Not now, I'm kinda busy. pdxi's Avatar
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    Simply wonderful. While reading this article, I kept thinking to myself, "I can do this, too". Excellent work!

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    I wholeheartedly agree with the advice not to charge based upon what your competitors charge. Like the author above, we once won a fantastic London client, way beyond our expectations in fact.

    After a good working relationship was built, I was able to ask the lead contact why, given the many lower-cost alternatives there were (we were relatively expensive) he chose us. He responded by saying that it was precisely because we didn't rate our abilities so low that they chose us.

    I also think that finding that common interest really is a bonus in building a trusted working relationship. In our case, we both had a mutual interest in Photography.

    Goes to show... If you don't consider yourself relatively exclusive or worthy, then you can be certain that few others will.

  21. #21
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    I agree with Brendon's approach to not charge by the hour but I disagee with his approach to not QUOTE by the estimated number of hours it would take to complete the project.

    Your "percieved professionalism"? Using a fountain pen? Leather briefcase? Giddy small talk? Those are all nice things but one of the best things you can leave with a client so he can percieve not only your professionalism but the professionalism and quality of your service is...

    A nicely designed brochure to go with your business card.

    You gotta leave something that reassures the client of the realiable, capable, and professional image that your services carry. The client is going to do more thinking after that initial meeting so it's better to have him think with something in front of him: your brochure.

    And give your client a fountain pen with your company, your name, logo, or whatever on it, if you can.

    Really good article though.
    Last edited by Mapo; Jan 17, 2005 at 12:57.

  22. #22
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    Great artice! The idea the author said is not very new, but the process he did is the best.

  23. #23
    Beej
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    I totally agree that this approach was good for this particular prospect. Sometimes it is not a good bet though...Do not to try it on a mom & pop computer repair shop! They were my first 'real' business prospect, on the verge of moving, or folding if they couln't find a new locale! I knew that money was an issue but since they knew me and liked me (I'd built and now maintain the web site for the local chamber they belong to) so they called me because they really wanted a web site and knew I could do one for them. I kept it all simple right off the bat, and let them barter with me. They love their new site and I love my new computer system!

  24. #24
    mel
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    Agreed with Beej. This works for particular prospects. In our area, up till now, whoever I met will first ask for price and will get impatient if you don't tell them the price instantly. Basically, these types of prospects are those we will not care about as whatever price we quote they will say too much!! Rather than continue wasting time on them, we will ask them politely to do it by themselves.

  25. #25
    SitePoint Zealot medicus's Avatar
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    There is a big difference between being a businessman/woman and being a web programer and this is true to anything. As for people who look for cheap one saying comes to mind "If you pay peanuts you get monkeys" ...


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