Whether it’s by email, by phone or through your website, it’s exciting when someone new reaches out to inquire about working with you on a new project — even more so when the project sounds interesting. Often, designers and developers get overly ambitious at this stage and rush into creating a project estimate to wow the prospect and show them how much they care.
The intent is good, but rushing into an estimate sets you up for future disappointment and lost sales. When things are rushed, mistakes are made.
My agency just celebrated 13 years. In that time, especially in the early years, I made every single mistake that you can possibly make when providing estimates for branding, web design and graphic design projects. As a result, there were times when I ended up working for free, completing projects at a loss, and having really awkward and uncomfortable conversations with clients. It wasn’t fun at all.
I hope that by sharing what I have learned, you won’t make the same mistakes.
14 project estimate mistakes to avoid
Here are 14 mistakes freelancers make when creating a project estimate and how to fix them or avoid them all together:
Not speaking to the client first.
Not knowing your minimum hourly rate.
Not accounting for profit.
Not accounting for additional expenses.
Not scoping projects correctly.
Not providing package options.
Not including terms and conditions.
Not sticking to your guns.
Not making the proposal a marketing piece.
Not making the prospect a priority.
Not making it easy to get started.
Not making it easy to pay.
Not catching typos and errors.
Not following up.
1. Not speaking to the client first
My company never prepares or sends a new project estimate to a prospect before we speak with them personally in person, on the phone or through video chat. Speaking with them allows us to ask critical questions to vet both the client and the project, gather important information we need to accurate prepare an estimate, get any questions we have answered, see if they have questions and make sure that we’re going to like working with the client and working on the project.
By always speaking to a prospect before providing an estimate, we ensure that we’re not wasting valuable time putting together proposals for clients who aren’t a good fit and aren’t going to become a client.
2. Not knowing your minimum hourly rate
Too many freelancers and agencies price projects based on best guesses, average industry rates, past projects or what the client can pay — which is a recipe for disaster. Every freelancer and agency needs to know their minimum hourly rate so they can make the amount of money they want to make and enjoy the quality of life they desire.
The minimum hourly rate is the minimum amount of money needed per hour worked to pay all expenses, work the proper number of hours and have profit left over. It is your cost of doing business.
When calculating your minimum hourly rate, you can’t just divide the salary you want to make by the number of hours you want to work. You also must take into account:
- Total overhead expenses, including rent, telephone, internet, utilities, office equipment, furniture, and supplies, software and service subscriptions, business travel expenses, salary, workers comp, benefits, insurance, taxes, advertising and marketing costs, legal and accounting fees, training and professional memberships.
- Total billable hours, including how many hours are worked each week and of those how many are billable.
- Total days off, including sick days, vacation days, holidays and business travel days.
3. Not accounting for profit
When estimating new projects, you can’t simply price the scope of work based on the number of hours it will take to complete and the expenses you have. You must also include a profit margin.
Profit is what is left over after all of the expenses have been paid, including your salary, that is available to reinvest in the business.
4. Not accounting for additional expenses
Occasionally projects will require the purchase of specific materials, tools, plugins or solutions. If you will be purchasing or securing any of these items on behalf of your client, you must account for these expenses up front in your project estimate. If not, you need to spell out exact what the client must purchase and the added cost.
5. Not scoping projects correctly
The problem is that many times, freelancers and agencies jump the gun. They provide a project estimate without doing the needed due diligence to gather all of the details needed to outline a crystal clear scope of work, communicate exactly what is included and what is not included, as well as what the process will be and the general timelines associated with each stage.
Find out not only what their clients need right now, but what they intend on doing in the future. And, just to be safe, consider doubling your estimated timeline. Almost every service provider overestimates their ability and underestimates the amount of time things take to get done.
6. Not providing package options
Providing one investment option makes the proposal all about what’s best for you, not about what’s best for them, and itemizing every item the client will get by cost is setting you up for failure.
Providing multiple investment options, on the other hand — like a small, medium and large option — meets the client where they are with the mid-tier option, then gives them both a “getting started” and an “all-in” option, which empowers them to make the best decision for their needs.
By creating the three options as packages or bundles, you’re making it more difficult for prospective clients to compare your estimate side-by-side with a competitor’s estimate. (When they can do that, the cheapest option usually wins.)
7. Not including terms and conditions
If you’ve been in business long enough, you know that no project is perfect. If every client was a great client, we wouldn’t have websites like Clients From Hell. And if every project was a great project, we wouldn’t have to deal with prospects who have horror stories about their previous designer or developer.
In every client agreement, estimate or proposal you send, you must include clear terms and conditions that set expectations, explain how things work, and what happens if things go south.
Don’t leave out the payment, technical or legal terms because they sound scary, feel intimidating or make your estimate feel too long. Remember, good contracts protect you and your client and set you both up for long-term success and a profitable relationship.
8. Not sticking to your guns
A few times over the past 13 years, prospective clients have asked me to change my contract terms or my process to fit their business or how they like to work. Twice I said yes to win the job, twice I regretted it with every fiber of my being throughout the entire project and twice I vowed to never do that again. Thankfully, after the second time I listened to my own advice.
When I compromised my process, the way I do business or my business terms, it negatively affected the project and the client relationships weren’t positive because from the very start. I let the client tell me what to do and how to run my own business.
Stick to your systems and process and hold fast to your terms and conditions because that is how you will do business best, how you will best be able to serve your client and how the best results will be created.
9. Not making the proposal a marketing piece
Before I ventured out on my own as a freelancer, I worked at a public relations agency. As the lone in-house designer, I designed and laid out every major proposal the firm presented.
What I learned over time is that the proposal is a critical part of the sales and marketing process.
Often, the prospect you provide the proposal to isn’t the only one making the final buying decision. Instead, they’re sharing your proposal (and maybe a competitor’s proposal) with a business partner, their boss, a spouse or other stakeholders, and looking for feedback. The problem is that these other people might not know who you are, may not know anything about your company or reputation and may have never been to your website, seen your portfolio or read the awesome testimonials featured.
This is exactly why you need to treat your proposal as one more marketing tool to help you close the sale and land the client.
Pro tip: In your proposal, consider adding a section about the company and about the team members the client will be working with, and throw in some relevant testimonials, too.
Give the mystery stakeholders the information they need to say YES to your proposal.
10. Not making the prospect a priority
If you run an agency or you’re freelancing, I know you’re busy and probably wearing far too many hats and doing far too many jobs. I also know that finding the right balance between serving your existing clients and landing new clients can be difficult.
When you finish a meeting, call or video chat with a prospective client and the next step is preparing and providing a project proposal, don’t put it off. The faster you can get a quality proposal completed and to the prospective client, the more likely it is that they will sign it and become a new client because you’re showing them that they are important and their business matters to you.
11. Not making it easy to get started
At my agency, Bourn Creative, we believe that everything we do, from initial estimate to post-project follow-up, should make things easier for the client. As designers, developers and consultants, our clients are busy and often overworked. So part of our job is to alleviate stress and make sure the project runs smoothly and requires the minimum amount of effort needed by the client.
This approach is especially important at the very beginning of the project:
- Requiring new clients to fax back a signed contract is often difficult and time consuming and few people have access to a fax machine.
- Asking the prospective client to print the document, sign it and send it back takes work.
- Making the client approve the estimate and mail it back you signed via snail mail makes them jump through unnecessary hoops.
Instead, consider leveraging online software and tools that allow you to send a proposal or estimate, track its activity and allow the client to accept, sign and pay the deposit electronically.
12. Not making it easy to pay
It is critical that you make it as easy as possible for the client to pay you, and that means giving them multiple payment options so they can choose the one that works best for them.
- Provide options for payment terms, including full pay, payment plan and retainer options.
- Provide options for payment type, including check, bank transfer, credit card and PayPal.
13. Not catching typos and errors
It’s embarrassing to admit, but in the early years of my freelance career I lost a few projects I really wanted because I rushed and sent the project proposal with the wrong client name on it. I also ended up doing at least one or two projects at a loss because I re-used a past client proposal for a new project that was almost identical, but failed to update and double-check the payment terms.
Yikes. I definitely learned my lesson:
- When you finish creating a project proposal, don’t send it right away. Instead, walk away and come back later with a fresh head, then proofread it carefully. I do this by reading it out loud.
- If you don’t trust yourself to proofread it meticulously, make sure you have a team member you trust available to proofread it for you.
- Consider making a quality assurance checklist to use each time you create a new project proposal.
14. Not following up
Never provide a prospective client a proposal and then sit back and wait to hear from them. Until the estimate is signed and the initial deposit is in hand, the project is still yours to lose.
When providing the estimate:
- Communicate that you’re available to answer any questions or provide more information to help them make a smart decision.
- Tell them that if you don’t hear back by a certain date, you will follow up with them.
Also, if you’re using software that lets you see what parts of the estimate a prospect looks at most, reach out and ask if they have any questions about the proposal or about that specific part. In this scenario, I’ll often say something like:
I’m checking to see if you have any questions about the estimate I sent over on Tuesday. More specifically, I wanted to see if you have any questions about [SPECIFIC PART] because we’ve found that a lot of clients have some concerns in this area.
If you’d like to talk through anything, have questions, or want to clarify anything, please let me know. I’m happy to help you get the information you need to make the best decision for your company.
If you haven’t yet had a chance to look it over, I’ve attached a copy for your convenience.”
Create project estimates with confidence
Now that you know what not to do when creating freelance project estimates, and how to avoid making the same mistakes in your business, you can create new project proposals with confidence. Just remember to follow these 14 tips:
- Speak to the prospect first, before beginning to craft the estimate.
- Know your minimum hourly rate and use it to calculate your package pricing.
- Build profit into every estimate to fuel future business growth.
- Account for any additional expenses like plugin licenses.
- Do discovery so you can scope the project correctly.
- Provide package options like a small, medium and large option.
- Include clear, simple and easy-to-understand technical, payment and legal terms and conditions.
- Stick to your guns, your systems and your processes.
- Make your estimate a marketing piece that helps mystery stakeholders say yes.
- Show the prospect they are a priority and that you want their business by providing the estimate in a timely manner.
- Make it as easy as possible to get started.
- Offer multiple payment options so the client can choose the one that works best for them.
- Proofread the estimate and review it carefully for accuracy and quality.
- Follow up with the prospect in a helpful way.
By following these guidelines, you’ll be well on your way to landing the right clients and projects for your business. Good luck!
Also published on Medium.