Before work ever begins on any project, a subtle, psychological game of “you go first” must take place over the budget. This is without a doubt, a frustrating game for both sides. As an agency, we don’t want to waste time on a proposal the client can’t afford. On the other side, clients are fearful of artificially inflated quotes built to squeeze every penny from that budget. This fear is highlighted by a comment from a client on this Newfangled article about website project planning:
I am wary of telling anyone a concrete budget these days, because if I say its 100K, then I will get quotes for 100-120K.
For the same project, they received a quote from three agencies that already knew their budget and one that did not. The three that knew, came back with a quote just at or above their budget. The agency that didn’t have a number to aim for? Their quote was $40,000 under budget. Sadly, this piece of anecdotal evidence helps reinforce the idea that agencies are just out to price gouge when they ask for a client’s budget.
Why should you ask?
There certainly are some agencies that just want to charge as much as the client can afford, regardless of the amount of work done. These people exist in every industry and I won’t bother trying to defend them. But, I will assume that you, like most agencies, are just trying to create a quote that matches a client’s needs with as little frustration as possible.
In a survey we did in 2011 of web design professionals, the average proposal process took eight and a half hours from start to finish. That is an entire day of unbilled work! I can see why some agencies would be hesitant to engage in this process without at least an idea of the client’s budget.
By clearly defining boundaries in the initial conversation with potential clients, specifically what your hourly rate is and why you need to know budget, you’re giving the perception that your time and knowledge are valuable. - Paul Chason
Christopher Butler, Vice President of Newfangled, explains why they start talking about money right away:
Vaguely representing your budget in order to try to control negotiation won’t work well for either party. A good web partner will consider your budget and tell you exactly what can and cannot be done with it, even if that means you end up spending less than you planned to.
As “good web partners”, we are tasked with defining and explaining what’s possible within a certain budget. All but the most savvy clients don’t understand the sheer amount of work that goes into a website. A good website requires experts from multiple disciplines: design, development, copywriting, user experience, SEO, marketing, video, and others. Clients are not paying for a website, they are paying for your expertise.
The marketing/design community MUST stop waffling on this subject and REQUIRE a budget range for websites and virtually all other project work. Otherwise, we’ll continue to get duped, strung out and taken advantaged of by prospects/clients who didn’t respect us or our industry in the first place. - Neil Myers
While Mr. Myers takes a much more hard-lined stance, I tend to agree with him.
Why don’t you ask?
Sticker shock is a very real thing and can cause a job to vanish in the digital wind if a client is not prepared. Most clients are unaware of how much web design and development actually costs. There is a severe disconnect between the quality of work seen online and the effort and skill required to achieve that. It is starting to get better, but for a long time most clients still assumed that their teenage neighbor across the street could do just as good of a job as the downtown agency.
I won’t go too far into why that is, except to say that unlike many other professions, there is no official route to becoming a web professional. Sure you can get a graphic design or computer science degree and even know, many institutions are offering web-centric programs, but these are by no means required to start a web design business. Just like the neighbor down the street, all you really need is the tiniest bit of knowledge to get started.
So, even if the client understands what they are paying an agency for (their skills, developed over years of experience), they may not understand why there is such a difference in price. It becomes hard to quantify why someone charges $50 more an hour, or $10,000 more for the same project. You could say that as part of the web community, it is our job to educate on the why, but we don’t get paid for that. Agencies are always chasing the next job, so there’s no time to waste on clients who need that education.
For every product or service, there is always a rage of possible prices. Even something as simple as a Coke has a different price depending on where you buy it. Each store has a different level of inventory, a different level of staff, and spends more or less on things like marketing, location, and salaries. All these variables equate to different prices for similar goods.
Now, imagine trying to price a service like web design, which has almost unlimited variations for every project. No two agencies will come up with the same solutions for any one project. Websites are mostly still a custom product. This is true of most creative industries. Even if everyone agrees on WHAT, there will be huge variances in HOW it gets built.
In a lot of ways, paying for a web design and development project is kind of like buying a car. Everyone would like to own a Porsche, but not everyone can afford to. More than that, not everyone should drive a Porsche. Some clients actually need a website with four doors and a lot of storage space, that gets good gas mileage.
The other half of the pricing formula is the story the price itself tells. A Prius at $40,000 or a Prius at $10,000 is the same car, but the price becomes a dominant part of the story. You can tell a story of value/cheapness/affordability, or a story of luxury. If you price your product or service near the median, you’re telling no story at all with the price, giving you the chance to tell a story about some other element of what you sell. – Seth Godin
I don’t want to tell you that you should have a crystal ball into every client’s income, but you should have an idea of what would be overkill for every project. Even if a client can and will pay you to deliver a Porsche, everyone will likely be happier if you sell them the Honda. This gets away from the original question though: what is the client’s budget and how do you find that out? Here are your options:
- Ask immediately. Many will not tell you. Should you pursue these clients if they won’t tell you?
- Get a feel for the project, see if you’re a good fit, then ask for the budget when you feel it is safe.
- Don’t ask, just estimate based on their “wants” for the project, and wait and see how they react.
Another option is to be very honest about your prices and let that filter the tire kickers out in the first place. Bill Erickson of wpaustin.com says the first thing he does when a prospect contacts him, is give them the minimum price for a site of $1500. He then includes referrals to other options if that starting price is too high.
Whatever your method, it is important to get the issue of price out in the open as soon as possible. It will save everyone plenty of time, headaches, and embarrassment.