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Via 37Signal’s Signals vs. Noise blog I came across a fascinating post written by Brian Fling of Blue last year on pricing a project. I’d like to talk about it and to explain my own philosophy. First a extended quote from Brian:
I find it funny… in a sad sort of way, that we often
start out our partnership with bluffing, no one saying what they are
really thinking… how much they are willing to pay and how much it
should cost… Though every book I’ve read on the topic of pricing says
to never ever ballpark, I have a tendency to do so. If they can’t
disclose the budget I typically try to start throwing a few numbers
from previous projects to help gauge the scope of what we are talking
about, call it a good faith effort to start the discussion… While this
is very awkward part of the discussion it is almost always followed by
candor. It’s as if once someone starts telling the truth, it opens a
door that can’t be closed.
I completely agree that candor is the only way to work with clients.
Maybe it’s the Quaker influence: we reportedly pioneered fixed pricing
back when everyone haggled, with the philosophy that charging true
costs were the only honest way of doing business. My official rates and contact page includes my list of “typical costs” — essentially these are the “ballpark estimates” that Brian talks about.
When I put together estimates I base it on my best-guess informed
estimates. I start by tabulating the client’s requested features and
determining how I’ll achieve them. I then estimate how long it will
take me to implement each feature and use that to determine a
first-guess for project cost. I then compare it to past projects, to
make sure I’m being realistic. I know myself well enough to know I
always want to underestimate costs–I usually like the project and want
to make it affordable to clients!–so I do force myself a reality check
that usually ends up adding a few hours to the estimate.
When I put together my official estimate I try to guess where
potential bottlenecks might happen. Sometimes these are technical
issues and something they’re more social. For example, a client might
be very particular about the design and the back-and-forth can take
longer than expected. If I think anything like this might happen I
mention it in the estimate. Sometimes as we work through the details of
a feature I’ll learn that the client wants some enhancement that we
hadn’t talked about previously and which I didn’t factor into the
When I do see a particular part of the work taking longer than
expected I flag it with the client. I try to keep them informed that
this will add to total costs. In many cases, clients have been happy to
go with the extra work: I simply want to make sure that we both are
aware that the estimate is changing before the work happens.
I charge by the hour rather than on a per-project basis since I find
it to be a much more open business model. Brian Fling’s post agrees:
The problem [with per-project billing is that] one way
or another somebody loses, either the client pays too much, meaning
paying more than it’s market value, or the vendor eats into their
profit… One benefits to hourly billing is the client is responsible for
increases of scope, protecting the vendor and the customer. If the
project is completed early the client pays less, protecting the client.
This puts the onus on both parties to communicate regularly and work
I have very little overhead: a home office, laptop and DSL.
This means my rates are very competitive (one client described it as
“less than plumbers and electricians charge, more than the kid who mows
the lawn”). Being very careful with estimates mean that I often
communicate a lot with clients before I “start the clock.” I’ve often
worked with them a few hours before the estimate is in and we’re moving
forward and of course some of this un-billed work doesn’t result in a
Putting together fabulous websites is fun work. It’s very much a
back-and-forth process with clients, and it’s often impossible to know
just what the site will look like and just how it will work until the
site actually launches. Half of my clientele have never had websites
before, making the work even more interesting! It’s my professional
responsibility to make sure I work with clients to foresee costs, dream
big, but most of all to be open and honest about costs as the process
While the images of U.S. soliders torturing iraqi prisoners at Al Grahib Prison in Badgdad have been broadcast around the world, US officials have frequently reassured us that conditions at the U.S. detention camp in Guantamano Bay, Cuba, were acceptable and in accord with the Geneva Convention’s rules for treatment of prisoners. As proof the Pentagon and Bush Administration have frequently cited the fact that the International Red Cross regularly inspects prison conditions at Guantamano. They forgot to tell us what they’ve seen.
A confidential report prepared by the International Red Cross this summer found that conditions at Guantamano Bay were “tantamount to torture.” Strong words from a cautious international body. Because of the way the IRC works, its reports are not made available to the public but instead presented to the accused government, in the hope that they will correct their practices. In predicable fashion, the Bush Adminstration privately denied any wrongdoing and kept the IRC findings secret. In a display of incredible audacity it then defended itself _from other accusations of torture_ by citing the IRC’s presence at Guantanamo, conveniently omitting the IRC’s strongly-worded criticisms. Amazing really.
The IRC report is still secret. We only know of it second-hand, from a memo obtained by the _Times_ that quotes from some of its findings (“Red Cross Finds Detainee Abuse in Guantanamo“http://www.nytimes.com/2004/11/30/politics/30gitmo.html, Nov 29). What kind of stuff is going on there? The _Times_ recently interviewed British prisoners who had been detained in Afghanistan and iraq and sent to Guantanamo Bay. Here’s one story:
bq. One one regular procedure was making uncooperative prisoners strip to their underwear, having them sit in a chair while shackled hand and foot to a bolt in the floor, and forcing them to endure strobe lights and loud rock and rap music played through two close loudspeakers, while the air-conditioning was turned up to maximum levels.
It’s not needles under fingernails or electrodes to the privates, but it is indeed “tantamount to torture.” While it was hard to believe these prisoners’ stories when they were first published a few months ago, they become much more credible in light of the IRC conclusions.
We still don’t know about what’s happening in the camp. The Bush Administration has the power, not to mention the duty, to immediately release International Red Cross reports. But the United States has chosen to suppress the report. No torturing government has ever admitted to its actions. Saddam Hussein himself denied wrongdoing when _he_ ran the Al Grahib prison and used it for torture. We rely on bodies like the International Red Cross to keep us honest.
There are those who defend torture by appealing to our fears, many of which are indeed grounded in reality. We’re at war, the enemy insurgents are playing dirty, Osama bin Laden broke any sort of international conventions when he sent airliners into the World Trade Center. Very true. But the United States has a mission. I believe in the idealistic notion that we should be a beacon to the world. We should always strive for the moral high ground and invite the world community to join us. We haven’t been doing that lately. Yes it’s easier to follow the lead of someone like Saddam Hussein and just torture anyone we suspect of plotting against us. But do we really want him as our role model?