Common mistakes freelancers make when creating project estimates and proposals and how to avoid them and convert more prospects into clients.
Whether it’s by email, by phone, or through your website, it is exciting when someone new reaches out to inquire about working with you on a new WordPress website project, and even more so when the project sounds interesting. This is why freelance web designers and web developers often get a little overly ambitious about potential new projects and rush into creating an estimate so they can impress the prospect.
The intent behind the action is good but rushing into a website estimate sets you up for future disappointment and lost sales because when things are rushed, pricing mistakes are made.
In July 2018, my design and development agency celebrated its thirteen year anniversary and in that time, especially in the early years, I have made pretty much every mistake you can possibly make when estimating and pricing projects for branding, web design, and graphic design. As a result, there were times when I ended up working for free, completing projects at a loss, and having really awkward and uncomfortable conversations with clients. It wasn’t fun and I hope that by sharing what I have learned, you won’t make the same mistakes I did.
Below I’m sharing the most common mistakes freelancers make when creating new project estimates how to fix them or avoid them altogether:
1. Not Speaking To The Client First
I never prepare or send a new project estimate to a prospect before I speak with them in person, on the phone, or through video chat. A conversation allows me to:
- Ask critical questions to vet both the client and the project
- Gather important information we need to accurately price the project and prepare an estimate
- Get any questions we have answered
- See if they have questions
- Make sure that we’re going to like working with the client and working on the project
By always speaking to a prospect before providing an estimate, I ensure I’m not wasting time creating proposals for clients who aren’t a good fit and won’t become a client.
2. Not Knowing Your Minimum Hourly Rate
Too many freelancers and agencies price projects based on best guesses, average industry rates, past projects, or what they think the client can pay, which is a recipe for disaster. Every freelancer and agency needs to know their minimum hourly rate so they can make the amount of money they want to make and enjoy the quality of life they desire.
The minimum hourly rate is the minimum amount of money needed per hour worked to pay all expenses, work the proper number of hours, and have profit left over. It is your cost of doing business. When calculating your minimum hourly rate, you can’t just divide the salary you want to make by the number of hours you want to work.
You also must take into account:
- Total overhead expenses, including rent, telephone, internet, utilities, office equipment, furniture, and supplies, software and service subscriptions, business travel expenses, salary, workers comp, benefits, insurance, taxes, advertising and marketing costs, legal and accounting fees, training, and professional memberships.
- Total billable hours, including how many hours are worked each week and of those how many are billable.
- And, total days off, including sick days, vacation days, holidays, and business travel days.
3. Not Accounting For Profit
When estimating new projects, you can’t simply price the scope of work based on the number of hours it will take to complete and the expenses you have. You must also include a profit margin. Remember, your salary is not profit, it’s a business expense. Profit is what is left over after all of the expenses have been paid, including your salary, that is available to reinvest in the business.
4. Not Accounting For Additional Expenses
Occasionally projects will require the purchase of specific materials, tools, plugins, or solutions.
- If you will be purchasing or securing any of these items on behalf of your client, you must account for these expenses up front in your estimate.
- If not, you need to spell out exactly what the client must purchase and the added cost.
5. Not Scoping Projects Correctly
When estimating a new project, your goal should be to outline a straight-forward scope of work, provide the most accurate estimate of cost possible, and set clear expectations. The problem is that many times, freelancers and agencies jump the gun and provide a project estimate without doing the needed due diligence and discovery to gather the details needed to create a clear scope of work and communicate what is and is not included.
Before creating a project estimate, be sure to explore all potential avenues and ask a lot of questions not only about what your client needs right now, but what they intend on doing in the future. And, just to be safe, consider doubling your estimated timeline because almost every service provider overestimates their ability and underestimates the amount of time things take to get done.
6. Not Providing Package Options
Providing one investment option makes the proposal all about what’s best for you, not about what’s best for the client, and itemizing every item the client will get by cost is setting you up for price shopping.
Providing multiple investment options, on the other hand, like a small, medium, and large option meets the client where they’re at with the mid-tier option, then gives them both a “getting started” and an “all-in” option, which empowers them to make the best decision for their needs. By creating the three options as packages or bundles, it is more difficult for prospective clients to compare your estimate side-by-side with a competitor’s estimate.
7. Not Including Terms And Conditions
If you’ve been in business long enough, you know that no project is perfect. If every client was a great client, we wouldn’t have websites like Clients From Hell, and if every project was a great project, we wouldn’t have to deal with prospects who have horror stories about their previous web designer or web developer.
In each client agreement, estimate, or proposal you send, be sure to include clear terms and conditions that set expectations, explain how things work, and what happens if things go wrong. Don’t leave out the payment, technical, or legal terms because they sound scary, feel intimidating, or make your estimate feel too long. Remember, good contracts protect you and your client and set you both up for long-term success and a positive relationship.
8. Not Sticking To Your Guns
A few times over the past thirteen years, prospective clients have asked me to change my contract terms or my process to fit their business or how they like to work. Twice I said yes to win the job, twice I regretted it with every fiber of my being, and twice I vowed to never do that again. Thankfully, after the second time, I listened to my own advice.
When I compromised my process, the way I do business, or my business terms, it negatively affected the project and the client relationship because from the very start, I let the client tell me what to do and how to run my business.
Remember, you’re the professional. You’re the expert the client is hiring to help them achieve something they can’t achieve on their own. Stick to your systems and process and hold fast to your terms and conditions because that is how you will do business best, how you will best be able to serve your client, and how the best results will be created.
9. Not Making The Proposal A Marketing Piece
Before I started freelancing, I worked at a public relations agency, and as the lone in-house designer, I designed and laid out every major proposal the firm presented. What I learned over time is that the proposal is a critical part of the sales and marketing process.
Often, the prospect who receives the proposal isn’t the only one making the final buying decision. Instead, they share the proposal (and maybe a competitor’s proposal) with a business partner, their boss, a spouse, or other stakeholders, and ask for input and feedback. The problem is that the other people reviewing your proposal may not know who you are, may not know anything about your company or reputation, and may have never been to your website, viewed your portfolio, or read your awesome testimonials.
This is exactly why you need to treat your proposal as a marketing tool to help close the sale. In your proposal, consider adding a section about the company and the team members the client will be working with, and throw in some relevant testimonials too. Give the mystery stakeholders the information they need to say YES to your proposal.
10. Not Making The Prospect A Priority
If you run an agency or a freelance business, I know you’re busy and probably wear far too many hats and do far too many jobs. I also know that finding the right balance between serving your existing clients and landing new clients can be difficult.
When you finish a meeting, call, or video chat with a prospective client and the next step is preparing and providing a project proposal, don’t put it off. The faster you can get a quality proposal completed and to the prospective client, the more likely it is that they will sign it because you’re showing them they are important and their business matters to you.
11. Not Making It Easy To Get Started
I believe that everything you do as a service provider, from the initial estimate to the post project follow up, should make things easier for the client. Your clients are busy and often overworked, so part of your job is to alleviate stress, make sure the project runs smoothly, and require the minimum amount of effort from the client.
This approach is especially important at the very beginning of the project:
- Requiring new clients to fax back a signed contract is often difficult and time-consuming and few people have access to a fax machine.
- Asking the prospective client to print the document, sign it, and send it back, takes work.
- Making the client approve the estimate and mail it back you signed via snail mail makes them jump through unnecessary hoops.
Instead, consider leveraging online software and tools that allow you to send a proposal or estimate, track its activity, and allow the client to accept, sign, and pay the deposit electronically.
12. Not Making It Easy To Pay
It is critical that you make it as easy as possible for the client to pay you, and that means giving them multiple payment options so they can choose the one that works best for them. Provide options for payment terms, including full pay, payment plan, and retainer options and provide options for payment type, including check, bank transfer, credit card, and PayPal.
13. Not Catching Typos And Errors
It’s embarrassing to admit, but in the early years of my freelance career, I lost a few projects I really wanted because I was overworked, I rushed through creating the project proposal, and I sent it to the client with the wrong client name on it. I also ended up doing at least 1-2 projects at a loss because I used a past client proposal as the base for a new project that was almost identical but forgot to update and double check the payment terms.
I definitely learned my lesson:
- When you finish creating a project proposal, don’t send it right away.
- Instead, walk away and come back later with a fresh head, then proofread it carefully. I do this by reading it out loud.
- If you don’t trust yourself to proofread it meticulously, make sure you have a team member you trust available to proofread it for you.
- Consider making a quality assurance checklist for new project proposals.
14. Not Following Up
Never provide a prospective client a proposal and then sit back and wait to hear from them. Until the estimate is signed, and the initial deposit is in hand, the project is still yours to lose.
When providing the estimate:
- Communicate that you’re available to answer any questions, provide more information or greater detail in any area, and help them make a smart decision.
- Tell them that if you don’t hear back by a certain date, you will follow up with them.
Also, if you’re using software that lets you see what parts of the estimate a prospect looks at most, reach out and ask if they have any questions about the proposal or about that specific part.
In this scenario, I’ll often say something like:
“Good morning!
Do have any questions about the estimate I sent over on Tuesday? More specifically, I wanted to see if you have any questions about [SPECIFIC PART] because we’ve found that a lot of clients have some concerns in this area.
If you’d like to talk through anything, you have questions, or want to clarify anything, please let me know. I’m happy to provide the information you need to make the best decision for your company. If you haven’t yet had a chance to look the estimate over yet, I’ve attached a copy to this email for your convenience.”
Create Estimates That Convert Prospects Into Clients
Now that you know what not to do when creating freelance project proposals, and you’ve learned how to avoid making the same mistakes in your business, you can create new project proposals with confidence.
Just remember to follow these 14 tips:
- Speak to the prospect first, before beginning to craft the estimate
- Know your minimum hourly rate and use it to calculate your package pricing
- Build profit into every estimate to fuel future business growth
- Account for any additional expenses like plugin licenses
- Do discovery so you can scope the project correctly
- Provide package options, like a small, medium, and large option
- Include clear, simple, easy to understand technical, payment, and legal terms and conditions
- Stick to your guns, your systems, and your processes
- Make your estimate a marketing piece that encourages mystery stakeholders say yes
- Show the prospect they are a priority and that you want their business by providing the estimate in a timely manner
- Make it as easy as possible to get started
- Offer multiple payment options so the client can choose the one that works best for them
- Proofread the estimate and review it carefully for accuracy and quality
- Follow up with the prospect in a helpful way
If you can follow these tips, soon you may notice that your estimates are so effective at converting prospects into clients, you may have to consider raising your rates!
