We often shy away from talking about budgets, which is a mistake. Open conversations about budget and timelines should always come first. It establishes a practice of discussing them transparently and safeguards against spending time on proposals for people who have no intention to commit.
I often use a capabilities presentation with a price list or price range to normalise the budget discussion. You’ll notice this in the template you used for the previous exercise.
The first things first, you’ll need to watch this eponymous video by Chris Do, founder of The Futur (whom I recommend following on your favourite channels).
Clients should value results, not time. If they valued time the logo could be delivered in a day right? They should value the quality of the final product and it's ability to serve their needs. What you produce in 3 weeks could take another agency or freelancer 3 months, does that mean that the other agency should bill 3 times more for the same result or worse?
We should never price too low, it always creates friction and inflexibility later in the production. By charging more we create more time to think on behalf of our clients and we eliminate the need to invoice for minor changes and surprises - which is never pleasant and quite frankly a bit of an injustice in our industry where things tend to change often.
When charging more than your competitors, we advertise to our prospective clients that we have confidence in our ability to deliver high quality outcomes. Another benefit of higher prices: the client will be compelled to confirm that the problem is important enough to their business that the potential value will quickly offset the cost.
Healthy margins also give you the ability to fix mistakes, thereby earning trust and building loyalty with your clients. Make sure to cover your costs, but don't hesitate to charge more if the work you're doing is valuable.
When it comes to pricing, the devil is in the details. A detailed price breakdown can sometimes backfire, tempting budget-conscious clients to dissect our process in the hopes of trimming costs.
But oversimplifying your price structure too much can also provoke questions. A single lump sum might work in a casual phone conversation, but when it's time for the formal proposal, clients appreciate seeing the cost segmented into smaller parts.
The goal is to provide enough information to validate the price, without exposing so much that clients feel invited to haggle over each component. A transparent, concise pricing layout that communicates value while discouraging unnecessary bargaining.
I try to determine the upper limit of the client's budget by proposing a large price range, this is also used in the capabilities template under the Investment section. Smaller price ranges feel safer, but restrict possibilities. “Looking at the intended result it looks like the price will be between 80k with a low end towards 70k. Where in this range is your budget for the project?”
Anchoring is a cognitive bias where an individual relies too heavily on an initial piece of information offered. Which is why when possible we should offer our price first rather than wait for a budget. Preferably a higher price with room to negotiate downwards.
Let's establish scope as the price, deliverables and capabilities.
In any digital project, creating a clear, comprehensive project scope is a critical steps. It establishes a common understanding among all stakeholders about what the project aims to achieve, what work it will entail, and what resources will be needed.
This common understanding helps prevent miscommunication, aligns expectations, and sets the stage for successful project delivery. A well-defined scope also acts as a guardrail against scope creep - the tendency for the project's requirements to expand beyond its original objectives.
If the initial brief and scope are quite clear, or if the pitch process was lengthy and the presentation turned into a detailed proposal - we can use either document as a basis for drafting the scope of work.
But, how do we communicate a scope accurately when that accuracy doesn't exists? If the brief isn't clear we propose a Discovery phase to start understanding the needs and come up with great solutions. When this is the case we can use the Production Bible delivered at the end of the Discovery as the confirmation of scope, which can be linked to and adapted for the written scope of work agreement.
In order to scope the project accurately, you’ll want to rely on your technical and creative directors to get a thorough understanding encompassing all aspects of the projects (features, technical integration, delivery methods).
Scope of Work
Effective communication is key to ensuring a shared understanding of the project's scope among all external and internal stakeholders. This includes not just the immediate project team but also senior management, clients, and any other parties involved in the project. It's important to document the scope in a clear and accessible.
A scope statement typically includes the project's objectives, deliverables, milestones, assumptions, constraints, and exclusions. It also outlines the project's approach to managing scope changes, ensuring everyone knows how to handle any necessary modifications to the project's scope.
I've provided the template for a scope of work document in the folder, which you can use in your upcoming productions.
As an alternative I've also often used what is commonly referred to as the Production Bible to encompass the project scope visually after a Discovery, the production bible is updated at each new review to include the latest creative material and stay up to date with the common understanding of the project scope.
It therefore becomes a production journal, where new stakeholders freshly arrived on the project can easily access the current scope but also see previous contributions, iterations and reviews to get a clear understanding of the full project context. Projects evolve and change over time, having an evolving document to supplement the scope statement can be helpful!
When starting a project with a Discovery I even refer to the Production Bible document in the scope of work's deliverables section.
Here’s a good example of what these safeguards can help you avoid:
Identifying potential risks and planning for their management is a crucial part of scoping. Risks could arise from various sources such as technological uncertainties, budget or time constraints, and stakeholder disagreements. By identifying these risks early in the scoping phase, the team can develop strategies to mitigate their impact or even avoid them altogether.
Risk management should be an ongoing process throughout the project lifecycle, with regular check-ins to reassess identified risks and uncover new ones. This proactive approach can help keep the project on track and prevent unexpected obstacles from derailing the project's progress
Use this chapter to scope your hypothetical project, roughly outline that scope in slides in the proposal and start drafting the scope of work document using this template.