When it comes to determining how much you should charge for a project, you need to take a careful evaluation of several factors:
- Your costs
- Your time
- Level of expertise required
No matter if you’re in business services, construction or event management, you need to price your project so that it’s worth your time, while at the same time falling within your client’s budget.
What Costs Do You Have?
If you have fixed costs (supplies, freelancers, etc), it should be fairly easy to determine what you need to cover. But sometimes you have to go out on a limb and estimate what your costs will be. Look at past projects you’ve completed using similar materials and provide a rough cost that you’d expect working on this project.
You may need to outsource some of the work, so factor in human costs. If you are, say, a marketing consultant, but need graphic design for a project, get quotes from a few designers before the project starts so you know what to build in for that component of the project.
How Much Time Will This Take?
If this is the first project of its kind, you may have no idea how long it will take. Talk to peers in your industry to get an idea of what it will take, or spend an hour working on the project to get a sense of how much you can get done. Then look at the scope of the project and create an estimate of your time.
If you can bill hourly on the project, you won’t have to pigeonhole yourself with a set price, but clients also don’t want to give you carte blanche to rack up hundreds of hours unnecessarily. Give an idea of how long it will take out of courtesy, even if you’re billing hourly.
Another important consideration is that it’s easy for clients to change their expectations and keep tacking on work. If you’ve already quoted the project pricing, you could lose money if the client piles on additional tasks. Always define expectations and responsibilities clearly and make it understood that any work outside of the defined scope will be an additional charge.
How Much Expertise is Needed?
If you’ve got a unique skill set (such as planning high-end corporate events), your expertise has a high value…and a higher pricetag. This should be reflected in the hourly rate you calculate into your costs.
But what if there are also areas of the project that require less expertise, such as running errands for an event? You can easily break down your time versus your assistant’s, and bill her time at a lower hourly rate. It certainly won’t seem fair to your client if you’re charging $100 per hour to pick up balloons for the event.
Things to Keep in Mind
Once you’ve come up with your estimate for all the moving parts of this project, add a buffer of 15-30%. Projects go over time and over budget, so make sure you don’t come out of pocket by adding a little wiggle room for unexpected expenses.
Urge your client to give as specific requirements as possible. The better you know what he wants, the easier your job will be. And be firm: if he’s not sure how much work he’ll need you to do, he will be charged extra once you go beyond the original plan.
Ask for at least half of the project fee up front. This shows good faith on the part of your client, and will help you cover the expenses you incur throughout the project.
Pricing may take a few tries to get right, but the more experience you have under your belt, the more accurate you’ll be for your next project.
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Photo credit: cobrasoft.