Let’s Talk About Money (Again)
Whether you’re a freelancer or run an agency, you have to talk to clients about money.
Is there a problem with that? Often there is.
You’re probably uncomfortable talking about money. You wish it wasn’t necessary, but since you’re running a business, you have to if you want to get paid.
So, let’s review all the ways to talk to clients about money.
How to Talk About Money During the First Call
A potential client contacts you about doing a project. Could you be available for a call? What do you say?
Ideally, you say some version of “yes”, but you might want to add some qualifiers.
For example, you might say, “Yes, I’d love to. Can you send me a brief ahead of the call so that I’m better prepared? Can you also share a budget range for this project?”
What if they say they don’t have a brief or a budget range?
Ask them to write you some notes in an email before the meeting.
Before you spend any time on a call, you want to know as much as possible about the potential project, including a general idea of the budget.
If you find out they’re looking for a massive job, but with a budget of $250, well… you don’t need to have that call.
But let’s assume you get some kind of brief, plus a budget range, and it’s time for the call.
On your call, don’t make any verbal commitments about the budget. The new client might think that now that they’ve given you project details and a budget range, you can give them a firm verbal estimate.
Don’t do it. Let them know that you’ll prepare a written estimate, including a full budget breakdown. Especially for bigger projects, you need to give yourself the opportunity to think through the job to prepare an accurate estimate.
Try to avoid committing to anything during a discussion.
No Estimates for Verbal Briefs
If you’re talking to a lazy or inexperienced client, they may want to give you a verbal brief (they talk, you scribble like mad), and then expect you to write an estimate.
Don’t do it.
Verbal briefs are written in air. They change depending on which way the wind blows. “I didn’t mean that.” “I didn’t say that.”
If a client expects you to invest the time to write an estimate, it’s only fair that you expect them to write a brief. Your estimate should answer their brief.
Make them write it out. Make them think through the details of their project. When you see their brief, you may have some questions. Get the answers from the prospect. Don’t make assumptions.
Before You Write the Estimate, You Need to Know a Rough Budget
Note: this is especially true for new clients. If you’re working with a long-term client, you probably both know how much things cost, and your next job will cost about the same as the last one that was similar. So, you just did a $5,000 job, and now you have another one.
But for a new client, you need that budget range. Let’s say you get a detailed written brief. They give you a budget range of $5,000 to $6,500.
But when you read the brief, it looks more like a $15,000 project. Now what?
First, read it again to make sure you’re right about your assumptions. Maybe look for a few ways this could be closer to a $6,500 project (lose the helicopter rental for the video?)
Then call the client. Have the money discussion. Determine whether they can “find more money” or not. If not, discuss what needs to happen for the project to align with the budget.
Before you write the estimate, the details of the brief and the budget need to line up. Otherwise, writing an estimate is a waste of time.
They may have unrealistic expectations about the budget, or simply, you’re not the right vendor for them. There’s always someone out there who will do the job for less. (Anyone need a $25 logo?)
You Have a Written Brief and a Reasonable Budget. One More Thing…
You need to know their deadline. An unreasonable deadline could be a deal-breaker. So, have that discussion along the way before writing the estimate.
But let’s assume the deadline is fine.
Write the estimate. If it’s a large project, break it down into logical stages. For example, for a website, you might include a stage that includes first draft of layouts, tech specs, and the content outline. Put a $X for that stage.
The following stages would be the development of those areas, each with a $X.
Why break down large projects with costs for each stage? Two reasons. You might want to progress bill by stage to help your cash flow. Say 1/3 deposit, 1/3 at the first round of approvals, and the last 1/3 on completion.
You also want to protect yourself in case a project gets canceled or dramatically changes direction part way through. Both you and the client will know what’s owed for work completed.
Money Talk in Your Estimate
Aside from the bottom line — this project is estimated at $10,000 — there is one other key area where you want to be specific about money.
This is in your terms and conditions as they relate to money. Decide on your terms for payment, ideally including a deposit. It is now a common practice to get deposits before you start a project. Here’s what experienced freelancers say about getting deposits.
For a small job, it might be 100% upfront. For larger ones, 50% upfront, the rest on completion. Or it could be three payments of 1/3 each.
Here’s an estimate template for big projects.
Whatever you choose for the project, be sure you state it clearly in your estimate and that the client agrees to it.
Here’s how to start every project with a deposit.
Walk Your Client Through Your Estimate
Once you’ve completed your estimate, let the client know you’re sending it over. But most importantly, get the client to agree to a call to review it with you.
So, it could be, “Hi Anna. I’m sending over the estimate in a few minutes. Could we schedule a call on Thursday morning to review it?”
Why do this? You want to make sure they’ve read it. You want to ensure they understand any important details. You’ll want them to agree to the payment terms.
This is their opportunity to ask any questions. They may also think of things they want to add or subtract from the project.
Now is the time to make changes before you start the work.
Assuming you have agreement on an estimate, you want some form of written approval from the client. Some people use platforms that let the client agree by checking a box. Or a simple email outlining agreement works. If they give you verbal agreement, send them an email acknowledging the agreement. You want written proof of consent to proceed.
Once the call is over and you have agreement, you’ll send them an invoice for the deposit. Remember, any time you’re asking for money, you have to send an invoice. That keeps their accounting department happy.
Money Talk for Revisions
You also need to address money in your scope of work regarding revisions. Our standard clause for revisions was, “Includes up to two rounds of revisions. Further revisions, if necessary, will be estimated in advance.”
Let’s take that apart. We include “up to” two rounds. There’s no discount for fewer rounds. If further revisions are required, we will estimate in advance.
Do not make additional revisions you intend to bill for before you get approval. You need to write a quick estimate for that revision and get approval. Why?
What if the revision costs $500? The client might decide not to do it. If you go ahead without approval, you could be in for an argument once you submit the invoice.
Like your original estimate, don’t do any revisions without budget approval.
A tip on the final round of revisions: when we got to the second round, we let the client know it was included. We asked them to gather up all the bits and pieces so that we could include everything at once. It’s a polite way of warning the client that it will cost them the next time they ask for a revision.
Too Many Arguments About Money? Get New Clients
If you have a client you dread talking to because they’re always trying to negotiate you down or throw in work for free, plan to drop them.
You work hard. You do your best. You should get paid fairly. Constant money arguments are soul-sucking.
Work on getting new clients so that the next time your problem client calls, you’re too busy. Whether or not they get the message, you can’t let someone like that ruin your day. Move on.
Need more help talking about money? You’ll find it in my book, How to Start a Successful Creative Agency. It’s the essential business guide for graphic designers, copywriters, filmmakers, photographers, and programmers.
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