Friday, April 15, 2011

Going Over Budget

I just had another great business meeting with young David Sappleton of Xcite Creative and then came home to read in the Toronto star “ Baeumler: The best job in the world ”.

David and I discussed projects; we work in different fields, but suffer the same penalties of clients accepting the product and then saying “Could you color it blue add another wheel to the left-hand side?”, which eats into our already-slender profit margin.

And we discussed ways to over come this problem; tightening the specifications doesn’t always do the trick.

I have tried proposing a fixed-price for the job, then hourly rate any time AFTER two weeks following delivery; if nothing else that tells the client to test the product quickly, not to wait 3 months before coming back to me.

The Star article includes this memorable line “… put away at least 15 to 20 per cent for contingencies …”.

That made me think.

I could issue a proposal for a fixed-price job, and then add (to the quoted value) 15% and mark that “contingencies”.

The message to the client is clear: I can do the job for $5,000, but we both know (don’t we?) that the unexpected crops up. Let us BOTH allow for that.

My message is clear: If nothing extra crops up (or if the client decides to say nothing crops up), then you pay the $5,000. But be aware that you ought to be prepared to pay up to $5,750 if part-way through the job your situation changes.

That way there are no unpleasant surprises.

Talk to Me !

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