Whose responsibility is to give budget for job: Freelancer or Client

Question

I work as a part timer freelancer at oDesk. At oDesk client budget is already written on job posts. So, many times there are chances that after a successful job with client, he/she offer me an another job without giving a budget. Since, I am not very good in determining job bid in such cases, I find it difficult to make a good bid.

So, I am wondering should I ask the client for a rough budget or I should try to bid myself? What's happen in such cases and whose responsibility is to give first bid?

Answer 1

I always cringe a bit when I hear a freelancer ask a perspective client "What's your budget?" Isn't that the same as asking "How much can I get away with charging you?" Or "Can I charge you more than I normally would without you realizing it?" For me, there is absolutely no reason I need to know the client's budget. I need to know the breadth, scope, and complexity of the project, that's all. It's for me to determine if it's a $500 or $50,000 job, then they can determine if they wish to pay for it.

I rarely get a budget from any any client (but I don't use online services either). If I do get a budget it is after my quote in an effort to possibly lower my costs to meet a lower budget (or as a negotiating tactic on their end).

I price all work according to what I need to earn. Isn't that how everyone should be pricing? I've calculated my hourly rate, then bear in mind current market rate trends, and ensure I'm never at a loss for any project. Is there a possibility that I could charge another 20% and retain the work, maybe. But is it worth finding out? Most often not. As long as I'm earning what I've determined I want to earn why chase after unicorns and rainbows? You know, a bird in the hand is worth two in the bush and all that.

If I calculate, based on the project scope, I need to charge $5000 to complete it. Then that's what I need to earn and that's what I quote. It makes no difference if the client has an $8000 budget. I price based on my rates, not what the client has in their pockets.

Imagine this... you go into a store and want to buy a stick of gum. You walk up to the cashier and she looks at you, and then says "Well, we would have priced that gum at $1, but since you have $20 in your pocket, how about we charge you $19.99 for it?" -- This is what you are trying to do by pricing based on the client budget. It's ethically questionable and ultimately will do you more harm with clients than good.

Determine your rates and then calculate project costs based on that. The client's budget should make no difference to you at all. Unless they express their budget is lower than your quote/bid and then it's up to you to determine if you wish to lower your pricing to meet a lower budget.

Knowing the budget only really makes sense when their are physical material costs. For example, remodeling your kitchen. A budget is needed then to purchase appliances, type of lumber, type of tile, etc. and know what is available to spend. But in the digital realm, where any material costs are pretty much known up front (if there are any at all), knowing a budget is pointless.

The notion that anyone creating digital content needs to know a budget up front is a myth. We all know what web hosting costs, we all know what domain registration costs, we all know what that third party scripting package costs. These can all easily be factored into any bid/quote. Pretending that a client's budget does anything other than alter how much one thinks they can change is bogus. All you need is a thorough and detailed description of project scope to calculate pricing. Beyond that, it's a matter of negotiation, not budget. If you price a project at $100k and the client states they have a $10k budget... it's negotiation as to what you'll not do or the client will not require to reduce pricing.

Answer 2

When client does not offer budget, he either wants to see if you can do it cheaper that he's ready to pay or he simply does not know the costs.

So you can do these things.

1. Analyze the work, count how many work hours it will take, then multiply work hours with your hourly rate, and you will get your price

2. When you are sure how many days/weeks it will take to finish job, and you know your desired weekly earning, you can propose the price by counting numOfweeksToImplementJob x weeeklyCompansation

3. Ask the client how much is he ready to spend to see if you can do it for his money. This should be the last resort since working this way, you don't know what your price is.

Of course you can always combine points 1 and 2. If the sum on point 1 is too large, you can decrese it as long as it's larger than the sum in the point 2.

Answer 3

Even if your client suggests a budget, you still need to make the kind of estimate that others have suggested. Some clients have no idea what it will take to do a project and some do but will try to get a low ball price from you. You need to be aware, before you sign something, of what you think it will actually cost you in hours to do his job. Some jobs (and some clients!) are not worth taking.

Estimating is something you get better at with practice. Estimate every job even if you been given a budget. Make notes about where the unknowns are and later, where you took longer than you expected and by how much, to finish that part. Keep those notes and review them when you are looking at the next job.

Secondly, limit your risks by estimating the job in parts. Propose a partial payment when you finish writing the specs, for instance. The next part may be due on demonstration of a working skeleton; and the final payment due on delivery of a content-complete system. Estimating and billing in stages may also give you some room to recover on the next stage some of the short fall on the previous one.

Answer 4

As freelancers, I believe that we need to define our own income goals and at the same time keep it in line with our target to provide the most cost-efficient solutions to our clients.

If the client is unsure about how much to pay, create a defined proposal - with a breakdown of all the work costs. If they have a pre-determined budget for project, compare it with your usual earnings for projects of the same kind and see how you can come up with a compromise.

Suppose the client presents us with a smaller budget as opposed to how we usually charge, bargaining with them may be a plausible option. Discuss the client's budget and come up with a plan to execute the project without compromising the quality. Talk to them about how their limited budget may affect the number of output to be delivered.

I understand that a lot of us are working so hard to deliver an excellent quality of solutions. Do not compromise it over a small budget.

Also, do not easily agree to a very low budget. It might hurt the market without you knowing it.

The previous answers were on point here, too. Think about how you could work on the project. The hours you'll most likely spent completing it, together with the amount of research work you'll have to put in and present them to your client. The costs you will show them should be concretely backed up by justified means of delivering the output.

If they insist on giving you a very low price, it's your call to agree on completing just part of it - what you deem is appropriate for the amount they will pay you. Offering clients a markdown on your service charges could also help you establish a trusted working relationship with them.

Answer 5

Scott already gave an in-depth answer - but I'd like to offer an opposite perspective.

Determining the rough budget is a standard part of a sales process. It's called qualifying your client.

There is no point you spending time on putting together a quote for $10,000 only to find that they only have $500 to spend.

And if they really only have $500 to spend, there is no point submitting a $10,000 proposal that will most certainly fail. Much better to try and sell them something for $500 that meets some of their business objectives and still gets you paid. If you can do this, the same client will start to trust you and see that you can solve their business problems, rather than deliver what they ask for.

Your job as a sales person is to create a win-win for your client and for you. The only way to arrive there is to ask questions, and the rough budget is one of them.

This is what a friend of mine does:

You: What is your rough budget?
Client: I don't really know (they say this in 99.9% of the cases)
You: Ok, shall we assume for the sake of conversation $20k?
Client: Oh, no, I was thinking more like $5k.
You: Ok, let's discuss your business requirements and see where what is feasible within those parameters.

Another has a dropdown on their website:

What is your annual development spend?

0 - 5k
5k - 10k
10k-50k
50k-100k
100k+

In your situation

You say that you already know these clients. That means that you have built up a relationship with them, which makes it easier to ask these questions. At the very least you can have a casual chat with them about the kind of money they are looking to spend.

And remember: Clients often make a list of requirements with absolutely NO idea of how much it's likely to cost. Simply quoting based on those requirements will win you much fewer jobs than discussing the business needs and working out a feasible solution within their budget.

Best of luck, happy to answer more questions.