One of the more challenging aspects of freelancing is working out how much your time is worth and getting paid for the job on time. We’ve all had bad experiences when we’ve under-quoted a project or just didn’t get paid at all. So, to avoid this happening to you in the future, follow these 5 tips to help you to improve your quoting.
1. The proposal
Spend time creating a formal proposal. This means talking to the client and discovering exactly what they need and what they expect you to deliver. If you can, try to find out what the client’s budget is. Many won’t tell you though because they’re trying to get the job done as cheaply as possible. Be very thorough with the proposal and make sure you cover things like your responsibilities (and the client’s), expectations, requirements, payment terms, and terms for changes outside the proposal etc. Nutting all this out at the start will save you significant $$ later on.
2. Charge by the hour
Instead of quoting a fixed price for the project, protect yourself by quoting by the hour. This will eliminate misquoting. In your proposal, provide the client with an estimated hourly rate and time frame to complete the project (e.g. $85.00 + gst/hour based on 40 hours). This makes quoting much easier and the client understands they are buying a block of your time that you think will be enough to finish the project. Any additional time spent on the project can then be charged as extra at an agreed rate. If you had quoted a fixed price and spent another 20 hours on the job, that’s 20 hours of your costs down the drain.
3. Up your costs by 10-20%
Always add between 10-20% to every job just to cover you for any unexpected situations – for instance, when the client pays you 3 weeks late! If you’re just starting out, don’t fall into the trap of quoting too cheaply just to get the job. This extra on top will cover all the behind-the-scenes stuff like administration, phone calls and bookkeeping. If you think this will take 2 hours, then add this time to the quote. Remember – you’re not working for free. You’re in it to make money.
4. Collect up-front
No matter how small the project, make sure you collect 40-50% of the costs upfront. This is common practice and your clients will expect to do this. Don’t feel embarrassed to ask your clients to pay an initial starting payment. It protects you from getting ripped off. Don’t start on the next stage of the project until the previous stage has been paid for and be very strict on this. As soon as you relax these rules, someone will take advantage of you. I know it sounds a bit harsh, but I have learnt this from my own experience.
5. Set a payment schedule
Sticking to a payment schedule is important so that you always get paid for the work you’ve done. Set the payment terms out clearly in your proposal so your clients are very clear on what you expect from them. If you aren’t exact and business-like about your payment schedule, clients will ride their debt as long as they can and as a small business owner, you can’t afford to let that happen. No money = no business.