Waiting on clients to review your work or supply you with needed material to continue a project can be extremely frustrating. It can also be damaging to your business because the gaps in time lower both your and your clients clarity about the scope of the project and your agreement. It’s not uncommon for scope to expand over time as people forget the details. This often results in additional project management overhead with emails, calls, and meetings even if you’re vigilant and clear about the scope. When the project is not moving forward, you have to try to manage slack into your schedule for the possibility of closing out the previous project and taking on new work. Finally, you’re not getting paid in the meantime which is crappy for your personal cash flow and ulcer inducing if you run a small web development company like I do and have overhead to pay down each month. Continue reading
Author: johnhooley
What’s Wrong with Value Based Pricing
Rates and pricing are a huge source of concern for web developers. We’ve all felt at some point that we don’t charge enough or need to figure out how to earn more. If you do any sort of research on the subject, eventually you’ll stumble onto something called value-based pricing. The basic idea is that you deliver a fixed bid on a project that is priced in respect to the value your client will receive from having that project executed. This causes an exponential increase in what you charge.
As an example: A SEO expert pre-value-based pricing charges clients $100/hour and has average engagements of $5000. They figure out that most of their clients earn more than $50,000 a year based on their work and switch to value-based pricing with an engagement fee of $20,000. The SEO expert still does 50 hours worth of work, but now they pocket an additional $15,000.
It’s a big idea that tends to create zealots out of its practitioners and it’s not hard to see why. Who wouldn’t love to be able to quadruple their rate?
Unfortunately, it’s not all sunshine and suitcases stuffed with cash.
I ran into this concept early on in my freelancing career and it was one of the more damaging changes that I implemented. It’s difficult to estimate my losses over time, but I would say that this approach probably cost me somewhere in the ballpark of $100,000. Continue reading
3 Tips to Prevent a Project from Dragging on For an Eternity
If you’ve worked in web development for any length of time, chances are that you’ve had at least one Frankenstein project that crept along at a snails pace. My personal record was as a freelancer with a two-year project. I was continually waiting on the client for reviews and sign off and when they did get back to me I found that we were often expanding into gray areas of scope- at my expense of course. As the project evolved, I spent countless hours doing research and trying to guide them through these gray areas to successful solutions. As I bent over backwards to help them, they began to expect it. The expanding scope created extra communication in calls, emails, and meetings and required even more time to review before moving onto the next part of the project.
The worst thing about it was that I really liked them and wanted to provide them with a great solution. On second thought, the worst thing about it was that I wasn’t getting paid for all that extra work because it was a fixed bid. The fact that I liked them just helped to make the whole process a smudge more bearable.
While I waited months between the communications to move forward I would dream about the day that the project would finally be completed.
How could I have prevented that slow-motion train wreck? Continue reading
How to Get Out of the Business
Many consultants build teams but find that they can’t quite separate from their business. We all know that we’re supposed to work “on the business” instead of “in the business” a la Michael Gerber’s E-Myth, but for some reason you can’t quite get all the way out.
You can’t trust someone to manage client accounts. Or, you can’t trust another developer to develop the application in line with your vision and standards.
Maybe, you have tried to hire somebody and you wasted months and thousands of dollars before determining that it just wouldn’t work. So now you’re stuck.
You have to take care of it because only you can get it right.
The challenge of getting out of the business is the largest obstacle you face. Every hour you spend in your business, you’re essentially idling because no one else can move it forward. It’s a huge tax on your momentum, like dragging an anchor behind you as you trudge towards your goals. Continue reading