How to charge for scope changes?

Hello,

I am working on a project which has suffered from changes to the scope (adding more pages / sections) as well as additional design tweaks (more than the estimated number). Now we need to charge for these extras. Our contract / proposal is very clear on the scope that was covered, however, there are no guidelines regarding what will happen if the project goes over the projected scope.

Now we need to charge. The straight forward option is to simply send them an invoice for the extra time based on our hourly, but that would add to quite a bit and I know that the client will cringe at that extra expense. Option 2 is to calculate the additional work as a percentage of the original scope and do the math and bill them that amount. But would that make sense to them? The final option is to talk it out with them and reach a conclusion. This may be a good idea but since this project has gone way over schedule I would rather avoid a conference call and simply send them a bill. However, they are a long term client and have always been very good about paying and etc.

What is the best way to go about resolving this?

Note: we are updating our contract to add a solid clause with an attached value for this issue in the future. But we have not yet reached an agreement as to what the value will be.

Thanks

As the vendor, it’s your role to lay out a coherent and easily understood pricing model for the client so that they know what to expect. Since you failed to do that, you really need to show them some consideration by making the situation crystal clear to them AND helping them to avoid sticker shock.

I would send them a note or call them and explain that:

  1. scope changes are accumulating and will affect the project cost

  2. reiterate your appreciation for the client’s business, and offer to work with them to avoid having the project cost spin out of control

  3. give them a REAL estimate of the hours/effort required to do the changes that have already been requested

  4. give them a substantial discount on those changes, and offer them a VERY good price for those changes even if it’s a loss for you (this is just good business, you didn’t set their expectations so you have to take some loss now in the interest of long term revenue).

  5. give them a very, very clear path forward. this part is easy - just decide how you want to handle this and make it an addendum to the contract. to keep it simple, you can just use an hourly rate and tell them that you’ll give them an estimate on how many hours each change will take and let them approve the changes before moving forward, then invoice. or, you can do the fixed-bid game and bid each change.

I would suggest that you jump into this with the client, give them a big break on the current set of changes and just move on!! :slight_smile: Good luck…

Surprises can be fun, unless they are bills that are more than you expected!

I dealt with this recently, and I dealt with it before I worked out of scope.

The client called up saying if they could add on A and B, I said sure no problem, however that will take time so the expected due date will be pushed back and it will also cost a little extra.

I have always found that people will respect you if you are very clear and honest.

Also I would advise if you told them you could do the changes without telling them it would cost more $, not to bill them, or at least not fully. You might just have to suffer some losses this time. It’s not good busienss to say you can do something without some type of an agreement, then you slap on some extra fees they were not aware of.

But if you know the client and you have a good relationship, call them up and talk it out, again if you’re honest and clear, they will be much more willing to pay for the extra features.

I agree, while you would prefer not to talk to the client, you’ve said they have been good in the past so there’s no logical reason to hand them the bill and run for cover. Scope creep does happen if your aren’t careful about declaring the limits you are willing to go to within your contract, thereby you should just give your client a quick chat and explain that things are going beyond the agreed level so you’re going to need to charge extra for additional changes. Always keep your client in the loop, be open and honest with them and don’t dump surprise bills on their doorstep unless you can avoid it - because they won’t appreciate the lack of notice. :slight_smile:

Number three (the final solution) is your best one.

Just my two cent: In the future, when a project goes out of scope, you really should talk it over with the client before you do any out of scope work.

Say you brought your car in for an oil change and while there, you told them to check the tires and replace them if the tread was too worn. Would you be happy paying for a new tire of his choice or would you expect him to explain your options as to price and quality?