Hidden Budgets and Fair Pricing
Now pretend you’re on the other side of the fence…
The company you work for is moving forward with a website redesign, and you have been put in charge of it. You send out an RFP soliciting professional recommendations on how best to redesign your site, and you attach the simple requirement that all respondents must include an estimate of time and cost. Shortly thereafter, calls start coming in. Apparently none of the people in the web design industry have any idea how much it costs to build a website, even though that’s what they do, day in and day out. All of the calls go pretty much the same: somebody babbles on and on about users and objectives, but in the end, it all boils down to one thing: everyone wants to know how much is inside the purse strings. You think, “If a company can’t tell me which of their services I need, and how much it’s going to cost, then they aren’t the kind of company I want to do business with.”
Being Bashful about Budgets
What’s going on here? Why is there such a huge disconnect occurring in conversations about pricing? The scenario above offers two contradictory rationalizations. To those in charge of hiring a web designer or agency, let me tell you straight out,
“Being secretive about your budget will not help you get the best price, solution, or partner.”
The budget should be the first thing addressed, not the last. It’s what determines how much can be done. It dictates what features and functionality can afford to be included. It determines how much time can be allotted to the project, and what types of research can be planned. Without a budget, the designer is forced to propose a solution based solely upon speculation of what the client can afford. This brings up another problem when blindly quoting complex websites: rarely does the RFP provide the designer with the type and depth of information needed to accurately propose a solution.
The problem isn’t that web designers don’t know how much a website costs, it’s that they don’t know how much YOUR website costs.
Your website addresses the unique needs of select people, and it must help your company achieve specific goals. There is no one best way to build, improve, or redesign a website. In reality, there are many different possibilities. The best web design solutions are the ones that work smartly within the constraints of the budget. As a client you should be very wary of “one solution fits all” design proposals.
Returning to the example above, before we dismiss the client’s perspective altogether, I think it is important to investigate why the client might feel this way. The reluctance to reveal a budget is indicative of a much larger issue under the surface: distrust.
The Root of the Distrust
One of the reasons that a client may hesitate to reveal a budget is that they themselves are unsure of what their website should cost. Many clients don’t understand the full extent of the work, time and craftsmanship that goes into building a website. How can a client have realistic expectations for cost, if they have don’t posses a thorough understanding of how websites are actually built?
Each year Gallup conducts a poll surveying how trustworthy the public deems different professions. How would web design agencies rate in the Gallup’s annual Honesty and Ethics of Professions poll? What about SEO Experts…how would they rank, and why?
Let’s consider the auto service industry for a minute. Many of us have no idea what goes on under the hood of a car, yet we need to put our faith in a mechanic when we want it repaired. Now think about the common public perception of mechanics. When selecting a mechanic, the first question that pops into my mind is not, “Is this mechanic any good?”, it’s “Are they trustworthy?”
I don’t believe that most auto shops are dishonest; in fact, my actual assumption is that most of them are honest experts in their field. Yet despite this statement, my first instinct is still to worry. Nobody wants to look like a sucker. When the mechanic is explaining to me what needs to be repaired, I might kick the tires a bit, nod in agreement, or hang my head over the engine pretending to know what some dumb tube is for. Why the ruse? What’s happened is that over time, enough unethical mechanics have taken advantage of their customers’ lack of technical knowledge and overcharged them, that it has affected the way we percieve the industry. Those guys may have made a quick buck, but at the expense of the reputation of hard working grease monkeys everywhere. Suppose you had been ripped off on your last trip to the auto shop, wouldn’t you be suspicious if the next time you brought your car in, the mechanic asked you what your budget was? And if you did have a budget for your auto-repair, would you reveal it? If, like many clients who don’t understand the nuts and bolts of web design, you were insecure about what things should cost, revealing your budget might expose your naivete and make you look like a grade-A rube.
Clients who are wary of revealing their budgets, may be driven by the fear of appearing unknowledgeable.
Nobody wants to expose themselves as vulnerable. Instead of pushing the client into a situation that makes them uncomfortable, help them understand your process and pricing model. The more comfortable the client is with you and your process, the less hesitant they will be about candidly talking about money.
- First off, charge your clients fairly.
- In my opinion, pricing fairly means that you place a value on your time and the services you offer. The price can be anything you think is appropriate, considerate of your abilities, knowledge and expertise. If you hike up your rates, or start adding on unnecessary fees just because you see the glimmer of gold, that would constitute unfair pricing. Don’t overcharge just because you think a particular client can afford it.
- Develop your pricing model, stick to it, and be transparent about it.
- The important thing is not how you charge your clients, but rather that you are open about how you are charging them. If your fees are high because you charge a lot for your expertise, say so. This is much better than charging a lower rate, then padding your hours to reach your desired profit margin.
- Be clear in all your proposals and documentation.
- Clients should feel like they know exactly what they are paying for and what they are getting. Always be specific about what types of deliverables they can expect to see and when.
- Avoid blindly speculating on cost
- This can set improper expectations for the client. If the price of the project ends up increasing drastically, it may cause friction.
- Announce all anticipated costs up front.
- Nobody likes to feel like they are being nickel and dimed. Establish cost for as much of the project as you can at the beginning. Also be sure to identify areas of the project that will require additional research to price accurately.
- Identify Scope Creep Immediately
- As a project evolves its not uncommon for new requirements to arise. Don’t wait to address how changes to the scope will affect the project cost. When additional work is introduced, promptly communicate to the client that additional costs will be incurred.
Don’t Rip Yourself Off
Much of this article is about trust and making sure that the client doesn’t feel like they are getting ripped off. There is another side of the coin, and that is making sure that you, the designer, are not getting ripped off either. Some clients, whether it’s because they’re stingy or misinformed, will try to take advantage of you.
- Accept your worth.
- Don’t apologize for your rates. You offer a professional service that is in demand. You have spent time on and off the clock perfecting your craft. Your product can increase your clients’ profit, and its impact can be measured with a number of different types of metrics. You are not peddling services in a flea market, so clients don’t get to haggle down your price. The fact that you do what you love and that it’s creative does not lessen its monetary value.
- Don’t accept sob stories.
- A lot of people want something for nothing, and are not ashamed to push for it. Don’t give a company a "break" because they are new. If the business they are starting is legitimate, and the client is even remotely organized, they should have budgeted for a web presence. Don’t let people make you feel bad for charging your professional rate. And don’t let empathy for the client make you feel guilty for being profitable.
- Don’t work for promises.
- This includes the promise of tacos, the promise of future work, and the promise of publicity. Promises will not pay for your next Creative Suite upgrade.
- Understand that humans are terrible estimators.
- Personally, I habitually underestimate the time that it will take me to complete a project. Track your hours accurately, and adjust your bid to account for things like client communications, project management, documentation and unanticipated snags.
Working for Tacos
I once took on a job for a small trendy taqueria that was opening nearby. They were a new business, and talked me down in price considerably. I ended up working for $10 an hour plus the promise of free delicious tacos whenever I wanted. After the initial work was complete, the owner would continually ask me to perform other bits of design here and there. His assumption was that this was included in the taco-trade portion of the deal, and that he shouldn’t have to pay for my time. I ultimately refused to do any more work for him, and the taco well dried up. Within two years the taqueria closed down, seeing as a man who pays his bills with Mexican street food is not destined to last long in the Chicago restaurant industry. And I learned my lesson which is, “As it turns out, if you get paid with you know, money, you can afford to BUY tacos.”