Calculating Hours - the Client Factors
April 19, 2008
Pricing for services is one of the vital realms where design professionals do not often possess significant skill. And this is a shame because price estimation skill is often directly tied to a designer’s ability to keep clients happy and derive a sense of satisfaction from the work; important stuff. So in this article I want to examine some of the common but not oft-cited factors that affect project hours’ calculations and how these factors affect our pricing considerations, all in an effort to help designers avoid pricing mistakes.
Project pricing involves, of course, several components, including:
- determining your hourly rate
- calculating project components (like discovery, logo and/or site design, interaction model design, development and/or CMS integration, project management and document generation, etc…)
- determining the scope of the project and its corresponding components
- calculating the hours involved for each component
- and scheduling, deadline, and timeline issues
Yet, even after you’ve defined all of these things, you’ve still got to exercise at least one more important bit of judgment before you can say what the cost of the project will be: You’ve got to take into account the character and makeup of your client and adjust your hours for each component of the project accordingly. Yes, this means that when doing identical projects for Client A and Client B, you may find it appropriate to charge anywhere from an additional 20% to double (or more) for Client B, based on certain important criteria.
Note that I’m not talking about charging IKEA more than you’d charge a local bakery for similar project, just because IKEA is a big brand name. Rather, I’m talking about doubling or tripling the project management hours or design hours when, say, the client stakeholders amount to a committee instead of a single individual. Different contexts require different considerations.
If you don’t know how to wisely modify your hourly calculations based on client specifics, you’re often going to be taken advantage of and/or find yourself and your clients frustrated with projects.
Way too soon to say
I expect that most design professionals tend to determine pricing and hours’ calculations based largely on the relatively ideal project. And surely this is a benchmark that we need to be familiar with. However, this sort of hours’ calculation should serve only as the basis of our determinations—to be modified based on the contextual issues specific to each individual project.
…you will seldom get a call from Client A. Most often it is Client B who calls on you for a project. But if you are not diligent and responsible in your pre-project conversations, you may never discover this important fact.
For instance, I regularly receive phone calls or emails from potential clients asking after some ballpark figures for their projects. It is quite common that very early in the first conversation the person on the phone will ask, “…so basically, how much will this cost?” I must then tell them that I can’t yet say. Or, if it is in an email, I say that I require speaking directly with them by phone or in-person before being able to offer such an estimation.
Now, because I’ve done my job for a few years and I know with some certainty how long it takes for me or my fellow team members to accomplish tasks of various scope, I typically have a good idea how much certain sorts of project will tend to cost. However, my answer to the potential client is always going to be, “Well, I’m going to need a bit more information before I can say.” Often times, I do really need more information about the project to get a firmer handle on the scope. But in every case, what I really need is to spend more time talking with the person, getting to know them; their communication skills, their attitude, their personality, etc. I need to know if they will be our single point of contact or if my team will be dealing with a group on the client-side. I also need to know if there are layers of bureaucracy on the client-side that will be involved in approvals or evaluations.
I need to know these things because they greatly affect how many hours are required for specific steps or components of the project process. Just because it typically takes me 35 hours to accomplish a typical small project design phase does not mean that it takes 35 hours for every client with similar needs. For Client A it may take me 28 hours and for Client B it may take me 48 hours. But I don’t know how to scope the project until I know a good deal about the specific client in question. And, I suggest, neither do you.
Let’s look at some of the factors that impact these sorts of considerations and learn to be prepared for the likely ways that they impact your pricing calculations.
Client A and Client B
Client A is a really good client—the kind we all want for every project. Client A has the following characteristics:
- She is the single point of contact for the project and the sole stakeholder, likely being the owner of the company or the CEO of the startup.
- She has an easygoing personality.
- She communicates well; she articulates her ideas clearly.
- She has a concrete idea of what she wants and needs from you for the project.
- She wants to leave the process definition up to you
- She wants to leave the fundamental design decisions up to you
- She has no pre-determined design or layout ideas
- She has a clear idea of her brand and can easily describe its characteristics to you.
This is the sort of client that I think most design professionals have in mind when they conceive of the basis for hours’ calculations for a project. For our purposes here, let’s use some arbitrary numbers to define the sample project like this:
|Project Mgmt.||9 hours (10% of overall hours)|
|Total||100 hours (x $100 hourly rate = $10,000)|
Because of the specific characteristics of this client And your familiarity with this sort of project, we can probably assume that the project goes smoothly and the hours you’ve bid are very close to what you actually end up spending to complete the project. Easy peasy.
Reality check: you will seldom get a call from Client A. Most often it is Client B who calls on you for a project. But if you are not diligent and responsible in your pre-project conversations, you may never discover this important fact. If you are diligent and responsible in your pre-project discovery, you will likely determine that the potential client has one or more of the following characteristics. What follows is a list of those characteristics and some suggestions for how to modify your base calculations used for Client A.
Client B is the typical sort of client you’re apt to encounter. Client
B has one or more of the following characteristics:
|Client Characteristic||Project Mgmt. Hours||Design Hours||Dev. Hours||Discovery Hours|
|Stakeholders include 3 to 4 individuals||Add 40%||Add 20%||-||Add 25%|
|Client Team is a committee or there are layers of bureaucracy involved in approvals||Add 50%||Add 50%||-||Add 25%|
|Client contact comes off as generally difficult or defensive (*1)||Add 30%||Add 20%||-||Add 25%|
|Client has trouble expressing ideas or communicating clearly||Add 30%||Add 15%||-||Double|
|Client has strong ideas for the layout or design (*1)||Add 30%||Add 40%||-||Add 15%|
|Client is not sure what they need and/or knows little about the target audience(s) (*2)||Add 50%||Add 20%||Add 15%||Double|
|Client cannot clearly and concisely describe their brand to you (*1)||Add 15%||Add 20%||-||Double|
|Client is not sure how the application should work or what all the components should be (*2)||Double||Add 60%||Add 30%||Double|
|Client describes having tried to do this project with 2 other agencies, but is not yet satisfied (*2)||Double||Add 20%||Add 20%||Add 20%|
|Client is rude or offensive on the phone, or speaks very critically of another agency by name (*3)||-||-||-||-|
|Client team involves their own in-house design staff||Add 50%||Add 40%||Add 20%||-|
|Client wants things done “yesterday” (rush job)||Add 35%||Add 30%||Add 30%||Add 30%|
|Client is not firmly committed to schedule/deadlines and signoff constraints||Double||Add 10%||-||-|
1. Consider not taking a project with this sort of client.
2. Strongly consider not taking on the project.
3. Do not take on the project.
Please note that the preceding suggestions for modifying hours’ calculations are just that: suggestions. These specific modifications might not suit your particular circumstances, but they are meant to be more of a model for relative adjustments according to some common client characteristics. Your mileage may vary and I urge you to base your estimations according to your own taste.
But we can see that in this case with the project described earlier, even though it may have an identical scope, practical modifications may cause this project to cost considerably more:
|Project Mgmt.||18 hours (10% of overall hours)|
|Total||144 hours (x $100 hourly rate = $14,400)|
The required hours’ modifications are based on the characteristics of the client in question, so the quote will be contextually appropriate to the client in question—not merely appropriate to your work habits. This ensures that you’ll be prepared to deal appropriately with how your client’s characteristics will affect the volume and character of the work you’ll be doing for them. This helps to keep everyone happy and helps to mitigate the otherwise inevitable surprises.
I hope you found this information worth considering and the adjustment model examples useful. Of course, you’ve still got to develop skill in discovering these relevant sorts of character issues in your potential clients. So in a later article, I’ll offer suggestions for how to discover just what sort of client you could be dealing with before you commit to a bid.