When it comes to your creative and technical services firm, creating accurate and comprehensive sales estimates is no small feat. It’s a nuanced process that requires a fine balance of precision and expertise, especially when your aim is to stay competitive and profitable. So, let me guide you through some transformative approaches to building better estimates.
Collective Collaboration
First off, let’s talk about the power of teamwork in your estimation process. Imagine a scenario where every team member, from designers to developers, has a say in the estimation process. This isn’t just about getting numbers on a sheet; it’s about leveraging the collective intelligence and experience of your team to ensure every aspect of the project is accounted for and accurately estimated. Never silo yourself and think that you and you alone should do the estimates.
Understanding COGS in Creative Realms
Now, COGS or Cost of Goods Sold might sound like a term reserved for manufacturing, but it’s equally pivotal in our world. Consider you’re roping in a VideoFX freelancer for a project. They charge $40 per hour, but the value they add allows you to bill their services at say $100 per hour. Effective estimation software should simplify this markup calculation, ensuring you’re set for a profitable margin while being transparent with your costs.
Level of Effort Hours and Work Types
The essence of a robust estimate is understanding the Level of Effort (LOE) required. Whether it’s programming, design, IT support or any other service you offer, assigning a “base rate” (in dollars per hour) to these work types and multiplying by the hours needed offers clarity and consistency. This not only helps in establishing a clear estimate but also aids in setting client expectations right from the get-go. Don’t worry, you don’t have to sell on time and materials, it’s just a foundation to use base rate x LOE hours. Base rates can be different based on the type of work or it can be calculated on the person if you prefer. I could charge $120/hr. for design and $185/hr. for python programming as a base rates for those Work Types. alternatively, perhaps Claire charges $185/hr for all her work since she’s worked for 4 years as a pro and Griffin charges $225/hr because he’s a 10 year seasoned expert. In any event, that doesn’t mean that if you need 10 hours out of Griffin, you can only charge $2,250. No… price markups generally and value markups get calculated later. But you should have a baseline to work from.
Certainly! Here’s a concise summary on deliverable templates to fit seamlessly into your article:
Leveraging Deliverable Templates for Efficiency
An indispensable tool in the estimation process is the use of Deliverable Templates. These templates act as standardized frameworks for common services your firm offers, such as a typical “Strategy Sprint” in SEO marketing. By incorporating these templates, your firm can significantly expedite the creation of estimates, ensuring consistency and accuracy across client proposals.
Deliverable Templates are not only time-savers but also pivotal in standardizing your firm’s pricing strategy. They ensure that similar projects are quoted similarly, providing transparency and building trust with your clients. Moreover, these templates are instrumental in setting the groundwork for productized services, which can streamline your offerings and enhance scalability.
While Deliverable Templates offer a structured approach to estimation, they also allow for necessary customization, ensuring that each client receives a solution tailored to their specific needs. By adopting these templates, your firm can improve its efficiency in creating estimates, maintain pricing consistency, and pave the way for future service innovation and scalability.
By integrating Deliverable Templates into your estimation workflow, you not only accelerate the estimation process but also anchor your firm’s approach to systematic, transparent, and client-centered service delivery.
Setting Realistic Timelines and Durations
Timelines are crucial, aren’t they? They need to reflect not just the hours of effort but also a realistic view of how those hours spread across days or weeks. There are LOE hours. Like a particular deliverable has 30 LOE hours to complete it. But then there is “duration” for completing the deliverable. The duration for this little example might be a week (unlikely), or perhaps you feel it’s 2, 3 or 4 weeks to complete those 30 hours. Since you’ve probably sold creative and technical services to clients, you know they are typically the ones that slow down the timelines, often to a paralyzing crawl. Ouch… we hate that too! But, that’s the nature of clients. Jake sure you factor realistic durations!
Mapping Out Dependencies
In our line of work, projects are seldom linear. They evolve, with each deliverable building on the previous one. Okay, sure…. the agile production methodology cares less about dependencies, but in order to place the PPC ads, you have to first do the creative and the creative is driven based on the research. You see where I’m headed with this? The compounding nature of projects and retainers is central to so much of the work we offer as creative and technical services firms. Acknowledging dependencies allows for a coherent timeline that mirrors the actual project flow, enabling you to plan better and forecast potential bottlenecks.
Transparent and Adaptive Pricing
Here’s where it gets interesting. Once you’ve calculated your LOE, how do you price it? Sure, a straightforward multiplication of hours by rate works, but what about the value you’re delivering? Applying value pricing and additional markups or discounts ensures your pricing reflects both your effort and the strategic importance of your deliverables.
Leveraging KPIs for Estimation
A good estimation tool doesn’t just help you create estimates; it helps you analyze them. By reviewing KPIs like markups, COGS, and average income, you can glean insights into your pricing strategy’s effectiveness, ensuring you’re not just competitive but also profitable. This is what we call your “estimated Net Net.” Good software will give you these estimates that you can constantly compare every nuance as you work through the project or retainer later on.
Ease of Client Approval: The PDF Output
In the end, your estimate needs to convince your client. A simple, clear, and professional PDF output that clients can review, understand, and sign off on is key to transitioning from estimation to execution. It should include the summary of the job, the deliverables, the timeline, the pricing and the terms by which you are offering the work (terms can be legal, payment schedules, etc). Sure… you may still need to slide the initial estimate into a Adobe InDesign to pump out an amazing looking offering, but in the end, the customer should sign-off from a simplified estimate.
Versioning
Changes and negotiations are inevitable. Your estimation tool should allow for easy updates, creating a transparent trail of how the estimate evolved. This isn’t just about keeping records; it’s about building trust with your client.
Seamless Transition to Project Execution
Lastly, once the estimate is approved, the real work begins. Wouldn’t it be seamless if the same tool that helped you build the estimate could convert it into a project, complete with tasks and allocations based on your LOE calculations? Imagine the time saved and errors avoided by not having to manually transfer all this data across platforms.
Contrast this with the old-school approach of using a generic spreadsheet tool like Google Sheets. Yes, it works, but think about the additional effort of transferring these estimates into your project and task management systems, not to mention the risk of errors and inconsistencies.
By integrating your estimation process with your project management system, you ensure that nothing is lost in translation. Your team can hit the ground running, fully informed of the project’s scope, timelines, and expectations.
The Bottom Line (Your Net Net)
In closing, building better estimates isn’t just about getting the numbers right; it’s about streamlining your processes, enhancing team collaboration, and setting the stage for successful project delivery. It’s about embracing tools and practices that resonate with the demands of our industry—ultimately ensuring that your firm isn’t just surviving but thriving.
Okay, okay… you got me… this is the shameless plug for Net Net. It does everything I’ve mentioned her… LOE, duration, timeline, pricing, KPI’s and of course one of my favorite parts is it it instantly converts your estimate to a project or retainer without all the manual steps in setting things up. So you’ll be ready to move fast and track everything!
