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  1. #1
    SitePoint Addict myrdhrin's Avatar
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    The client think his website is worth 100,000$

    Hello,

    I have this prospect who thinks the site he wants his worth 100,000$. But talking with him I think he could get out with it for 40k or so. He knows how much I'm charging per hour when doing estimates (125$)...

    How should I proceed... just go with it... take the contract for 100,000$ and work with him so he gets his money worth.... or give him my view of the value of his website....

    It would be my first very very big contract... I'm nervous about it (at first I would have said excited) but at the same time I don't want to get screwed or to screw anybody.

    Any cues?

    Thanks!
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  2. #2
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    That's a problem one would like to have often!

    I would keep it in the middle and say 65k are enough:
    1) he is happy
    2) you are happy and still have a good margin for those "extras" that always come out later

  3. #3
    SitePoint Addict myrdhrin's Avatar
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    I guess I should also try to see what makes him say it's worth the 100k... there are probably things he's got in his mind to push up the price.
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  4. #4
    SitePoint Wizard LiquidReflex's Avatar
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    Wait, he is saying that a site that he wants created would COST $100,000 or a site he already has set up is WORTH $100,000? They are 2 very different things.

    By your response, I'm going to assume it's the first and that he wants a new site and he's estimating that it would cost him that much. If this is the case, then you really need to sit down with him and go over specifics (which it sounds like you haven't yet since you said "there are probably things he's got in mind to push up the price"). I would NEVER give out a price without having every single spec down and explained in detail as even the slightest change can make a big difference.

    Even though $100k sounds like a huge price and you think there would be no way it would cost that much ... you'd be surprised. When it comes to highly customized sites, time involved can add up very fast. Who knows how much stuff he wants done or how many "never been done" things he may want.

    Whenever a whale comes along, I know it is tempting to just undercut the price because you're afraid you're going to scare them away (thus if he says $100k and you say $75k, he'll for sure give you project ... but if you say $100k he may change his mind). Don't think that way. You need to carefully evaluate the project and everything involved and come up with a number you are going to charge. His number is irrelevant (besides letting you know that $100k is what he is expecting to hear). Even if that was his budget, that only tells you that if the project were more than that, he may not be able to do everything he wants at that time.

    Sit down with him, go over every single bit of the site that he wants or is thinking of, take very detailed notes and then tell him you'll get back to him with an estimate. Go home, calculate it out, determine the benefits of the site to the client, where they would start earning profit, etc. All this will give you the numbers that YOU calculate as a fair price. If that means $50k then tell him $50k, if it means $150k tell him $150k ... don't just pick a number around there because you think it may be close. Sit down, breathe and relax at the thought of landing the whale. Treat this project just as you would a $5k project. That way, you get what you feel is fair for the work and the client gets a site that will benefit him in the end.
    Kevin Hauge : Modern Leaf Design : Follow Us on Facebook
    Client Axis v.08 - client / project management script

  5. #5
    SitePoint Addict myrdhrin's Avatar
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    Thanks for those words.... and for sake of clarification he thinks the site should cost him 100k.
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  6. #6
    Serial Publisher silver trophy aspen's Avatar
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    When it does come time to sign a contract, make sure its very very very very specific and has been reviewed by a lawyer. The client might have a mental break of what he wants his site to be, and what he tells you he wants it to be, so months later he might think "Well how come you didn't do this" and whatnot.
    Chris Beasley - I publish content and ecommerce sites.
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  7. #7
    SitePoint Addict myrdhrin's Avatar
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    Thanks Chris!

    I dunno if I helped myself or not but based on the few requirements we gathered so far we're already showed them a demo of what we could do with the little knowledge we have of their business... (a package from another customer we tweaked for some quick flashy stuff). The agreement of doing business with us and the 100k number came after we did the demo.

    The demo was not a big thing to prepare... 10 hours of work but it allowed us to make a good first impression (or second impression if they accepted to see a demo in the first place)... it also gave us plenty of feedback right away.
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  8. #8
    SitePoint Addict Parafly9's Avatar
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    Quote Originally Posted by myrdhrin
    Thanks for those words.... and for sake of clarification he thinks the site should cost him 100k.
    I'm surprised he volunteered that information. Talk about throwing away leverage.

  9. #9
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    I think you should get all of details on the project and make sure you know what he's asking for (in every respect).

    Tell him it's going to cost $125k but let him talk you down to $100k

    That way you both get a good deal

    Seriously though, there's a good chance that if you do charge him alot less he's going to think either you don't understand the scope of the project or you're not very good. Charge more and let him know you're worth it.

  10. #10
    SitePoint Wizard LiquidReflex's Avatar
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    Quote Originally Posted by optimus_prime
    I think you should get all of details on the project and make sure you know what he's asking for (in every respect).

    Tell him it's going to cost $125k but let him talk you down to $100k

    That way you both get a good deal

    Seriously though, there's a good chance that if you do charge him alot less he's going to think either you don't understand the scope of the project or you're not very good. Charge more and let him know you're worth it.
    The problem is, what if this is a test of your honesty and character as a business? If they threw out that really high number to see if you'd say, "oh yeah, that's exactly how much it would cost", you may look like you don't know what you're doing either. Now you just lost a legitimate $80,000 project because you got greedy.

    These types of situations are also why many businesses are hesitant to give you a budget for a project. If they give you a budget, in their mind they're just waiting for you to charge exactly that or a little more instead of what you originally would have priced them at.

    Come up with your quote just like you normally do, based off of your time and the value to the client. No matter what number you come up with, just ensure you can back it up. Coming close to their $100k and not being able to explain the details on what brought you to that number will surely hurt your chances of getting the contract.
    Kevin Hauge : Modern Leaf Design : Follow Us on Facebook
    Client Axis v.08 - client / project management script

  11. #11
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    Sorry I probably should have been a little more clear. My response was meant to be taken a little tounge in cheek.

    I think you are right - it's very important to be able to justify your costs at all times. Even if you are coming in way under 100k, you still need to be able to justify your costs. The one point I was trying to get at though, is that clients will rarely give you an honest idea of what htey expect to pay (if any idea at all). It's just part of business... I've never been highballed by a client but I've definately been lowballed many times. The fact that this guy is saying he thinks this project is going to cost 100k tells me one of 2 things:

    1) Either he's an idiot and likes giving away any negotiating leverage he has.

    2) This project is worth MORE than $100k to him and he's hoping that by throwing out that price he's starting the negotiations at what he considers to be the minimum he's going to pay.

    I would assume #1 is false because he's a businessman with $100k ready to go and you don't get to that level by making foolish mistakes.

    You have to keep in mind that $100k is either a lot of money or very little money for a website depending on how you look at it. There are agencies out there that won't do websites for less than $250k. Just because $100k is a lot of money to us, he may actually be looking for a deal.

    I had a client recently call us up asking us to design the front end design for his travel site. He offered us $25k, and although that seems like a lot of money to me just do design a front-end his other option was to hire a larger agency that might charge him hundreds of thousands.

    Now, I'm not saying my approach here is the correct one, I'm just saying you should carefully consider this situation from every context. Look at it from his shoes... what are his options if he doesn't go with you? How much is this job worth to him? How valuable is your team to this project?

    Consider all of these things, do you're due diligence, and in the end you'll just need to charge what you feel is right.

  12. #12
    SitePoint Evangelist
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    Tell him to visit rentacoder.com, they will do it for $50. lol.

    Nah, I wouldn't rip the guy off....if it's not worth $100k then don't charge him that!

  13. #13
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    Also, I suggest to evaluate VERY CAREFULLY the business you are getting into.

    Not meaning to scare you, but my personal rule is that whenever one speaks too freely of spending large amounts of money that often happens because he really knows he is not going to spend it.

    I mean, do your homework, get a contract signed, get a reasonable advance payment, agree on clear payment steps ...

  14. #14
    SitePoint Addict myrdhrin's Avatar
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    Frox... you're not frightening me at all. We're working on the contract right now and I have a lawyer ready to look at it when we agree on the general lines of it
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  15. #15
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    If he thinks his site is worth $100k, I would show him why it's worth $150k

  16. #16
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    Quote Originally Posted by myrdhrin
    Hello,

    I have this prospect who thinks the site he wants his worth 100,000$. But talking with him I think he could get out with it for 40k or so. He knows how much I'm charging per hour when doing estimates (125$)...

    How should I proceed... just go with it... take the contract for 100,000$ and work with him so he gets his money worth.... or give him my view of the value of his website....

    It would be my first very very big contract... I'm nervous about it (at first I would have said excited) but at the same time I don't want to get screwed or to screw anybody.

    Any cues?

    Thanks!
    Here's what I'd do. If he's willing to pay $100K for a website, then tell him you will handle everything. If you are not prepared to advise that you can and will handle "everything" then you should not be dealing with this amount of work or clientele. Get him to cut a cheque to you immediately or advise to transfer the $100k into your bank account --- or at least half to show he's serious about that $100k website. Trust me, people love to talk and chatter but when it's time to pay up is when the entire flow goes wrong.

    Work out a deal with the firm selling the site, and try to get it for as low as possible (ie: $40K as you suggest). This way you can add in the invoice: fees and other associated costs $60K which you could respectively add in your customized services any way you see fit.

    He's happy, you are happy and the people selling their site really got their money's worth.

    Good luck!

    Regards,
    Peter

  17. #17
    SitePoint Addict myrdhrin's Avatar
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    Peter,

    Nobody is selling a site that already exists. The guy just have the feeling that on the lerm term, with the amount of work he imagine beeing needed on the site that he'd should cost him around 100k to build it.

    After talking with him face to face and looking at what he really knows on the long term he came to realize that altough he values software design at an actual cost (not like a cheap labor thing) he can't really foresee if he needs all that work done to have a succesfull business/site.

    So... long story short... We agreed on terms. An hourly cost and numbers of hours he would have every month to develop his site (that comes down to a fixed amount of money he needs to pay on every delivery). All of this is based on a backlog of features he will manage (he puts in what he wants, we puts in the estimate.... a SCRUM like approach) and an actual duration this agreement will be.

    That actually gives him a few things:

    1- his industry is currently redefining itself, as we have not agreed on the full set of functionality he'll be in a better position to readjust his site as he foresee it.
    2- he's actually in control of how much he spends on his site and altough the hourly rate is pretty high he's aware that he will be getting the value he's looking for (in other word the 100k was a perception of value that translate for him easily in the hourly rate).
    3- in the end he might not spend 100k when he realizes he's spent enough for the actual ROI.
    4- he's not gonna wait 3-6months before seeing a working site... and after the first few months we will put his site online giving him actual real feedback to drive where he wants the site to go.

    What this gives us:
    1- We don't have to agree right away on the full requirements knowing perfectly well that there is no way we can get it all right the first time
    2- We get some money every month as we deliver those small iterative packages.
    3- We also get feedback very early in the process .
    4- We keep him responsible and involved in the whole process (he's the one deciding what we get to do next).
    5- We get to learn his business as we go in this whole experience with him allowing us to give him more and better suggestions on how to improve his business.

    I'll try to post later to get more details... right now I need to get busy on some other work!!!
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki

  18. #18
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    Thanks for the follow up. I must have read your comment wrong then. I thought it sounded a little far fetched in terms of your "client" wanting to buy a $100k website so now I see. No harm done.

    Off topic, If possible, would it be too much to ask what site your client is referring to in terms of a $100K worth/valued website? If not, thats fine.. I've just been building websites for quite some time and it's interesting to know what normal clients think about different sites they see to put a high priced value on it.

    For $100k value-wise, I'd assume the website in focus for this discussion has countless content and has pretty large member or community or advertiser base. Either way, I think your approach is very well rounded. Please do keep me updated and this is quite interesting.

    Good luck my friend,

    Regards,
    Peter

  19. #19
    SitePoint Addict myrdhrin's Avatar
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    Peter! thanks!!

    Right now he's trying not to speculate too much on the possible reselling value of the site. He knows that other companies in his industries are waiting on the outcome of some of the ideas so the face value of the site could be fairly high once we got an implementation working.

    The site has a lot of content/products and a few very interesting twists... As I'm still not certain how new and bright theses twists are I'll hold them back for the moment but as they become public and available through the site to be built I'll keep you posted :-)

    Oh! btw the approach is nothing of my own... it's in response to the Agile Manifesto. My partner and I strongly believe it's the way to go.

    Thanks for all the info!
    Jean-Marc (aka Myrdhrin)
    M2i3 - blog - Protect your privacy with Zliki


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