Quote:What strategies do you guys use to figure out the client’s budget? It’s risky to go through that discovery process which can be time consuming just to find out your client’s budget was $500 once it comes time to talk money.
First, it’s important to distinguish between a sales process and a discovery process. “Discovery” is billable and done under contract — it’s basically consulting to plan an eventual web development project. Sales, by its nature, is not billable.
When a client comes to me with poorly defined objectives, or goals that I’m not 100% sure how to fulfill, then I push them to begin to a paid discovery process. Obviously sometimes they’re not willing to pay, and if the potential project is large enough, I’ll say screw it and incorporate discovery into my sales process. But generally, if the client is not immediately giving me enough information to write a scope of work and begin a design or development phase, I’m going to insist that they pay me for some discovery work.
(That was not the case during my first 1-2 years in this business. At that point, you bend over backwards and do whatever is necessary to land the contract.)
As for finding out the budget — I just ask. It feels weird at first because we are accustomed to being so circumspect when talking about money, but anyone with business experience will understand the importance of getting a number. When people hesitate to give their price range, I often make an analogy to renting an apartment: you can rent an apartment for $1000 per month, and you can rent an apartment for $5000 per month. But those are two completely different apartments, with completely different amenities, in different parts of town, etc. And if you have the budget for the $5000 apartment, you probably wouldn’t even consider the thousand dollar apartment, although you certainly could afford it.
Similarly, I can set up an e-commerce site on Squarespace for $1000, or I can design & develop a custom Magento site for $100,000, soup to nuts. Both sites are e-commerce, but otherwise they’re completely different, and it doesn’t make any sense to start talking about feature set or functionality until you have an idea of what the client might conceivably spend.
Quote:Louie, what industry yielded the most clients in your startup phase? I know you mentioned that it’s easier to sell a business whose products are 10k a pop than a restaurant that serves $5 burgers due to the return on investment for them. But are there specific industries that gave you the biggest bang for your buck?
Early on, I worked with a lot of nonprofits. That was partly because I was recently out of college and many of my university connections had gone into the nonprofit sector. But also, there are lots of nonprofits with deep pockets and big budgets for custom web work.
More recently, I’ve focused on publications and e-commerce sites. Publications are similar to nonprofits in that a lot of them are funded by wealthy organizations or foundations with essentially unlimited cash. And e-commerce sites are good targets for obvious reasons.
That said, if I were starting over, I wouldn’t target an industry, I would targeted type of business which you basically described: B2B, with high margins for each client. In any large city, there are a hundred thousand different businesses that fit that description. 99,000 of them have shitty websites and no SEO and would see significant ROI on a low five figures web overhaul.
Quote:Where there ever any contracts you underestimated on, and had to foot the bill for the overage?
All the time. But by now, I know to charge high margins for my developers’ work, so it is hard for me to lose money, on net.
The bigger risk is burning through that margin. If I flat price a project where my goal is to do 300 man hours of work at a $60 margin per hour, and I end up going so far over my time estimate that my margin per hour drops to $20, I don’t technically lose any money, but I make much less than I was hoping for. That’s the more common scenario.
This is why you a) hire someone with the expertise to create accurate estimates and b) always pad your estimates. For padding, my rule of thumb these days is to multiply by 1.2 for estimates I’m sure are bulletproof, and 1.35 for estimates where there is any doubt.
Quote:Any bad experiences with the contractors you hired on?
Again, all the time. “Bad” ranges from the developer being less skilled than I hoped, to someone falsifying hours they didn’t work. That’s the nature of hiring people. At the moment, my team is skilled and reliable, pretty much across the board. But for my first several years in this business I was constantly hiring, firing, and recruiting new developers.
Quote:In regards to Wordpress plugins, some of the more useful ones have a cost. They range from single website use ($50 for example) to a developers license ($500 for example) that can be used on unlimited websites. Did you purchase these single oage plugins and then past the cost on to the buyer? Did you purchase the developers package and then consider it an investment? Did you do neither and instead rely on the contractors to provide them?
I don’t do much WordPress these days. But this is more a question of business principles, and my inclination would be to purchase the developers package for the first client who needed it, pass the entire cost (plus markup) onto them, and then use it going forward. Of course, every subsequent client who gets the plug-in on their site will be paying $500 for it, minimum.
If the plug-in does something useful, most clients won’t flinch at paying $500 extra for it, and they definitely won’t consider the possibility that they could buy and install the plug-in themselves for $50.
Always look for chances to grow your business on your clients’ dime. I learned that from one of my mentors/clients early on, and it has served me well.
Home
RooshV.com
Search (Via Forum)
Member List
![[Image: 1.gif]](https://imagicon.info/cat/13/1.gif)
![[-]](images/collapse.gif)
The following 1 user Likes LouieG's post:
