Budgets Can’t be SecretsPosted by Chris Garrett / March 2, 2015
How to make your project fit your budget.
A project’s defining factor is its’ budget, whether the project is a house, a holiday or an app. You always build to your budget. If you don’t tell your builder/travel agent/developer what your budget is, they don’t know where to start.
There are houses with in-built coffee machines and views and there are houses that you see on Hoarders. Most people can value a house on the spot to within 20% accuracy, but it’s rarely the case with web projects.
In our experience budget is the least favourite topic when discussing a new project. Nobody likes talking about money, but unfortunately that’s generally how you pay for things. The conversation is often left until the last item in the meeting or danced around without any definite indication.
Me: What’s your budget for the project?
Prospect: Oh we don’t really have one. We were hoping you could tell us.
Me: Well, we built something like this for the Government a few months ago for $80,000
Prospect: What!? Oh no. That would bury our business?
Me: If we changed X and Y and moved Z to Stage 2, we could cut that down to $50,000
Prospect: Oh that’s still way out of our range. We couldn’t spend more that $20,000 on this.
Me: So … $20,000 is your budget? Great! Let’s find a solution within that budget.
Often the worry is “if I tell you my budget, that’s what the project will cost”. There’s no need to worry – because you’re absolutely right! That’s probably about what it will cost.
Stick with me. It gets better.
Your budget will guide the solution. It’s like shopping in a guitar shop. You come in with that sheepish grin on your face and a pocket full of cash. You tell them your budget and they show you the instruments you can afford. After a few more questions about the type of playing you like, they will guide you to some ‘pretty sweet axes’. If you don’t tell them your budget, you’ll be stuck in the custom section for two hours falling in love with things worth more than your car.
Budget guides the solution
With web projects in particular, there are always numerous ways to solve a problem. A clearly defined budget tells your developer:
- what solutions are available to you
- whether they will be adequate or overkill
- whether the project needs to be broken into stages
and, if they are working with you rather than for you,
- the best ways to spend your budget for maximum return.
The budget is critical to the solution – not necessarily in a limiting way, but it determines how the project is approached.
With one simple question, we already have a better conversation – “How do we solve this problem within this budget?” See? Not so hard.
It doesn’t need to be an awkward conversation. If it’s up front initially, your web team can ask better questions and you can find a solution together. Most of the apprehension lies around not knowing the value of vague things like strategy, design, development or reliable relationships. That uncertainty creates fear that you might get ‘ripped-off’.
Having been in the industry since 2002, the most common cause of web project failure occurs when either the project is badly managed or the budget isn’t clear from the start.
A good way to avoid getting ‘ripped-off’ is to work with a company that has come recommended. Ask around for recommendations. Do some research and find a style you like. You could even call a business and ask who did their website. They are more often proud to tell you. Find out if the project went smoothly. Then you can worry less about getting the wool pulled over your eyes.
What determines an estimate?
Estimates will be loosely based on an hourly rate. The development team will know roughly how long each element will take based on past experience, but there are other factors involved too. For example;
- Project complexity. Different skills are often charged at different rates, depending on that skills’ salary, which is often dependent on what it has taken to learn that skill or its’ rarity. Smart people usually cost a bit more, but it’s still cheaper than getting it wrong.
- Tight deadlines. A compressed schedule means developers will have to be moved off other projects to get yours completed in time. Priority service comes at a premium in any
- The value to the business and its’ audience is always important. Creating an email template would be quoted at an hourly rate, but a full online retail business would be valued at much more than a simple hourly rate.This is the ENTIRE business that you are building – shop front, payments, security, inventory control, shipping, returns, specials, vouchers, upsells, cross sells, analytics, STRATEGY, and the list goes on. What would the bricks and mortar version be worth? It requires careful thought and planning by people that have done it before.
- Exposure. A developer may agree to a cheaper price in exchange for the exposure they may gain from the project. This is sometimes useful for web businesses starting out, but it’s never a great bargaining chip. It would need to be extraordinary exposure to warrant a discount. If a developer agrees to this, be wary that they can actually deliver. And, shame on you for suggesting it anyway. If the stakes are high, you don’t want beginners on the job.
- Company size. Larger companies often pay a higher price for services, not because they ‘just should’, but because large companies often come with more overhead. Each step in the project takes longer because there are more stakeholders and a longer chain of command.
- Budget Caps. Often large business and Governments have limits on day-to-day expenditure. If they want to spend over a limit, for example $10,000, they need to go to tender.No business in their right mind wants to go to tender. It’s expensive and time consuming and usually goes nowhere because it’s simply a price-check for the company that already has the project.
Most firms will either say no thanks, or somehow make it work.
So, next time you go hunting for web services follow these 3 easy steps:
- Find a company by referral. Ask around. If you are Googling, you are going in blind.
- Do some prep. Figure out what you want and why, how much you can afford.
- At the initial meeting, start the conversation with, “I would like to build [X] and this is my budget.”
You will almost always get a better result with this approach. If not, you’ll have saved yourself and your prospective web team a whole lot of time and effort and you can move on.