Experiences with Clients on Proposals

[Sega]

I am fairly new to this, so please forgive some naivity I might have.

I write up proposals for clients. I offer web designs to web development. I like to work with open-source systems, so that's what I am currently with, this might change in the future, as I learn more.

When I give out proposals I itemize everything giving a complete breakdown. What I am finding is that clients are working on the proposals subsequently removing things in order to reduce the price, some of those things are vital in order for their site or campaign to work.

I have a client who wishes to undergo strong Facebook campaign, the cost to set this up is fixed, from there on it's just the advertising fee. Naturally the client wants to pay sa little as possible, and plays with his advertising budget, which is the main driving force of their campaign. Without an advertising budget what I've produced won't work.

Do you guys normally itemize what you're trying to sell? or do you just give a proposal with everything in with a price on the end.

What are your experiences with clients when working with proposals?

[ralph.m]

I guess you've just got to be clear with the client what are the consequences of cutting corners. Then decide if the job's worth doing under those circumstances. I like to itemize everything so that it's understood how much I'm doing, but I'll say if something's not optional.

One thing worth getting clients to focus on is what value the product is likely to add to the business. If they are getting worried about costs, help them focus on the fact that this product (be it a website, email campaign, FB page or whatever) should be making them money, not costing them. It's an investment, which, if worth doing, will provide a pretty quick return on investment. If there's not a likely ROI, then the job is not worth doing.

The first time I did an email campaign, the client was horrified by the cost of setting that up. But within a few hours of the email being sent, people had rushed into their stores and bought products to the value of ten times the cost of the email campaign. I was kinda wishing I had charged more.

[Sega]

I was kinda wishing I had charged more.

It's just sometimes hard to say IT WILL MAKE YOU MONEY.

We don't know that for sure. Say they are offering something not of value. People are quite happy not to pay anything and loose the possibility of making more money, just because they don't fully understand something. Trouble is I don't think anybody truly understands what we do, including people in the trade.

Recently had a potential client showing my a site worth approx. 50K. He was saying how nice it is, fair enough. Trouble is, how would you manage situations like this. You can show me a site like travelsupermarket.com, but once you realize what a site like that costs, would you be so inclined to produce it.

In order for anything to be sucessful clients have to pay a certain amount of money. Just like you would not expect somebody not to work for less than 350EU per week, then clients can't expect 2/3 people to work on their website/campaign for less than their expected salary plus additional running costs.

There happens to be a big divide in what people expect to pay. I think you're completely right, I have to be more clear on the proposals. I somehow shot myself in the foot by being too cheap, and barely making a living, substantially subsidized by my parents.

[ralph.m]

There happens to be a big divide in what people expect to pay. I think you're completely right, I have to be more clear on the proposals. I somehow shot myself in the foot by being too cheap, and barely making a living, substantially subsidized by my parents.

I know it well. It galls me sometimes that a business doesn't think twice about buying a car for the business at $30-40K, but balks at a few $K for a website. There isn't yet a clear idea in people's minds about the value and cost of websites. No one would think of going into a new car showroom and offering $2000 for a BMW (a machine that, incidentally, probably came off the production line in a day or so) but will balk at spending a few thousand dollars on a website that may take months to build.

[Sega]

No one would think of going into a new car showroom and offering $2000 for a BMW (a machine that, incidentally, probably came off the production line in a day or so) but will balk at spending a few thousand dollars on a website that may take months to build.

You've hit it on the nail there. There is not a clear idea of how much a site will cost and there is no guidance on this. They see me and probably think to themselves, "he looks young", so I expect to pay less. Trouble is, I can't survive on less. I think maybe a few of my clients are going to have a shock when I creep those prices up.

[ralph.m]

They see me and probably think to themselves, "he looks young", so I expect to pay less.

Well, I can guarantee you they don't think I look young, but they still expect to pay less.

[TheRedDevil]

You've hit it on the nail there. There is not a clear idea of how much a site will cost and there is no guidance on this. They see me and probably think to themselves, "he looks young", so I expect to pay less. Trouble is, I can't survive on less. I think maybe a few of my clients are going to have a shock when I creep those prices up.

The problem is the "perceived value" of the service provided. In our business we "sell ourself" so to say, if you manage to convince the client that your product has a higher value and a better sales conversion then you can charge a lot more money.

I believe most of us has been in your situation when we started out. It took me a few year to build up and extend the company, and during the first years before you got a "name" it was quite difficult at times.

If I could look back and give myself a piece of advice, it would be to rise the hourly rate much earlier than I did. As when you charge "peanuts", you only attract low ballers as customers. The kind of clients you want to work with, will shun you, wondering what is wrong with your service since you charge so little. By increasing the hourly rate in increments over the next X months/years, you will get rid of the low ballers, and be able to get more desirable clients as well. Just dont increase the rates so fast that you lose all of your current clients and have no new ones to replace them.

[Sega]

If I could look back and give myself a piece of advice, it would be to rise the hourly rate much earlier than I did. As when you charge "peanuts", you only attract low ballers as customers. The kind of clients you want to work with, will shun you, wondering what is wrong with your service since you charge so little. By increasing the hourly rate in increments over the next X months/years, you will get rid of the low ballers, and be able to get more desirable clients as well. Just dont increase the rates so fast that you lose all of your current clients and have no new ones to replace them.

This is pretty sound advice.

I have increased my rates. I remember at one point I was working for a month solid for 500 EU. From you experience did you find that once you increased your rates clients left. One of my clients now is at a crossroads, I recently quoted him the standard rate, so he'll probably leave. I can't work for peanuts though, and those kind of clients don't deserve such services.

I don't charge per hour however, I charge per job. Would you advice to charge per hour. If so, what would you do if a client kept asking for design changes, would this simply be charged. How would you manage an hourly rate? Do clients normally know how many hours you've worked on something beforehand.

I know at some point I will probably have to hire staff, where the hourly rate thing becomes even more important. I have managed to get a couple more clients, so things are looking upwards. It's just hard when people undervalue what you do.

[TheRedDevil]

As you increase your price, lower end clients will start dropping off. The goal here would be to increase the prices in such manner, that you dont lose all of your old clients at once. But instead lose a couple each time, allowing you to free up time for new better clients. Basically making certain you still have for bread and butter while you find the new clients.

As long as you quote per project, it is easier for you as well to increase the price and you can do it more often than if you charge per hour.

Personally I prefer to charge per hour, as that makes projects easier to handle. If a client want an additional feature, or more revisions we dont need to setup a new contract for the new cost, it is just billed hourly. However we also quote per project if the client request it.

If you dont do it already, you should start to evaluate projects in how many hours it would take to complete it. This makes it very easy to provide both an hourly estimate "X hours at € Y", or a quote (same principle, you just pad in more hours and multiply with hourly rate).

For your question, when you work hourly you dont offer revisions on a design (at least we dont) but instead for every change requested by the client, we just keep billing for the time we spend.

[hifigrafix]

We initially set our rates very competitively. Once our work queue got filled up we started raising our rates dramatically. Fortunately our workload has been very steady and we're now charging a lot more than first realized.

Consider the mind of a "GOOD" client. You will be one of 3 or 4 (usually a lot more) shops bidding for a project. They are initially going to drop the lowest and highest bids and then focus on the quality of the work proven by the mid-grade proposals. My point being you don't want to be the low-hanging fruit or the client will perceive you negatively and you'll lose out on work.

My advice is be fair to yourself and your work will show it. You can work like a dog for a few dollars an hour so you need to take on more work to pay the bills or you can charge a good amount and still have time to learn new techniques and enjoy life.

[Sega]

Such good advice here.

I think you both @TheRedDevil and @ralph.m are completely right.

Personally I prefer to charge per hour, as that makes projects easier to handle. If a client want an additional feature, or more revisions we dont need to setup a new contract for the new cost, it is just billed hourly. However we also quote per project if the client request it.

Makes complete sense. Are you never in a situation when people challenge this, and don't want to pay you the hourly rate. How is your contract setup, is it setup that your job has a cost with approximate hours (e.g. 13 hours), and from then upwards the client will inherit an hourly rate fee.

I started out charging per job, and I would not take into consideration the hourly fee. I very early on came up with a problem, which I am not trying to resolve. It's understandable that the more hours you spend on something the better it tends to be. It would terrible business sense to charge 100 euros for an entire weeks work, but at times this is what I often did.

My advice is be fair to yourself and your work will show it. You can work like a dog for a few dollars an hour so you need to take on more work to pay the bills or you can charge a good amount and still have time to learn new techniques and enjoy life.

Precisly, you cannot learn new things if you're not charging enough. We need to make a living and I honestly feel that this living is strongly determined on the prices we're charging. Clients who wish to pay 100 or so EU for a site are likely to find boilerplated solutions, and are likely to suffer as a result. There are websites, and there are websites, but a quality web designer is only a quality web designer when he get's paid enough to spend enough time on a website to make it quality.

Honestly guys, I cannot thank you enough for this advice. I have been thinking like this for a while, but many have tried to challenge my thoughts. Come to think of it most people want websites, in some shape or form, and knowing somebody who can do this for them is a great benefit, the only problem the majority don't want to pay for your living.

[dojo]

I don't break down my services too detailed. I offer web design services and, after taking a look at my client's request, I come with a price for it. My prices are not big, are not too small either, it's what my work is currently worth. Having clients haggle is not something I'd accept. When I give you a price, it's already a great price, so anything like 'let's not do this', or 'can you cut $100 if we don't do this' makes me thank them for the opportunity and wish them well.

I can understand people are looking for good prices, but when I see they're stingy for their own good, I don't want to be part in a bad project. Fortunately I was able to build up a very decent clientele who knows what to expect and that my prices are correct.

[dpcomputing]

i usually detail each part of the quote.

But you have to be carefull as to not give away too much details in case the client gives your quote to a competitor who can then easily follow your quote and provide a price without doing the legwork.

[jdog]

Hi Sega,

we too use long and detailed proposals and they are definitely positively viewed by many clients. In addition to charging higher prices, have you tried walking prospects through the items in the proposal? Do this in person or with a tool like teamviewer. It helps the client to understand that everything in there is needed for a reason.

HTH,

Jochen