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SXSW Panel: Business side of web design
I just sat in one of the "quicky" panels here in the afternoon. This one was presented by James Archer of Forty and I give him a 8.75/10 in score. Really quick and to the point, quick blips, no silly ppt animations and clear speaker. Very good job all around!
Here are my notes — he went through this as a "40 step" plan….
step 1 – figure out your business
– freelancer
– partnership
– small team
– big agency
– company
he suggests that you figure out what you want to be and then work towards it
step 2 – limit your services
he notes every possible service but says you should really focus
step 3 – find a business role model
– their role model is starbucks
step 4 – don't be a flake
– make sure you appear correct to your business clients
step 5 – write a manual for the magic
step 6 – don't trust your brain
step 7 – don't let your clients followup with you
– you should contact them before they need to contact you
step 8 – don't let your colleagues follow up
– see step 7
step 9 – get addicted to strangers
– talk to people you don't know to help you grow
step 10 – always be teaching
– "tutorial marketing" helps to prove you know what you are talking about
step 11 – beware of perfection
step 12 – never trust a big butt and a smile
step 13 – cheap is sexy
– cashflow is critical to your business
step 14 – you didn't get ripped off
– we didn't get ripped off, we let ourselves get ripped off
step 15 – be firm with your clients
– they actually like this
step 16 – if we settle for nothing now…
– we will settle for nothing later – i.e. don't do spec work
step 17 – make it their idea
step 18 – don't bill hourly
step 19 – track your time
step 20 – honor your commitments
step 21 – be serious about scope
– shows the project cartoon
step 22 – study project physics
step 23 – never deliver crap
step 24 – never work anonymously
step 25 – use the right tools
step 26 – be different
step 27 – write your company constitution
step 28 – prioritize passion
step 29 – do a good job
step 30 – always do what's right
Step 31 – plan for the future
step 32 – plan your work and work your plan
step 33 – put employees first
step 34 – invest every dollar
step 35 – treat your clients like you love them
step 36 – use solid contracts
step 37 – embrace uncertainty
step 38 – play
step 39 – take vacations
step 40 – go that way, really fast
I’m printing these out. Thanks for the notes.
tell me you got audio for this one? sounds like an interesting panel.
dude – when i get out my mic i think of you
Audio would be most splendid
lol, I am honored :p
great, thanks for this!
I disagree with #18 to a certain extent.
For a lot of freelancers, billing hourly is the way to go…coz you know the clients will come back and request some tihngs that you may not have initially planned for. Of course, you need to make the client understand that this is out o scope etc etc…but most of the time, their understanding is that they do not need to pay extra money.
#18 is the ideal way to stay competitive. I have had many customers that were burned by previous companies/contractors that were negligently over billing hours worked. If you want to charge hourly, I recommend starting with a fixed price and when the time comes, begin working towards an hourly maintenance contract. By doing things in the manner I have mentioned, the customer gains faith and trust in your work.
When you do a project, you should use an easy to use “unit” to gauge the progress. Yes, most people will choose time, specifically man hours.
The important thing here is to not directly bill your clients in such a way. Time is a very sensitive unit of measure for work. For one thing, it doesn’t reflect the quality of the product, and for another, it’s deemed to be more biased towards the vendor.
Hence my use of the word prostitutional to describe it. It’s more like you’re selling your time instead of your service.
So essentially, manage your project in hourly blocks, allocate the costs according to that block, add in your profit margin, and present your calculation as the quoted price.
If you (or the client) require a cost breakdown, break it into “job” allocations.
To me this is a win-win situation.
But make sure that you have a solid statement of work that outlines change managements policies and procedures.
Method of billing is really the biggest point of friction for web work. I never see creatives bill by the hour. I always see programmers bill by the hour. (Which do you think of more economically viable for the average worker – programming or design?) The fact that the web combines the two markets muddles expectations.
If you’ve been in the business more than a week, you charge hourly. Why? The clients who ask for a fixed rate aren’t doing so because they got burned, but because they know that they can squeeze you to do work far and above what you were planning on in the first place, for the same fixed price.
What? They didn’t tell you that the “navigation menu” they wanted was actually a FLASH navigation menu? The contact form that you thought would take 5 minutes now takes a whole day because they want each mail to be sent to a specific emailbox and a specific header added to each email?
If you’re new to the business, heed these words. There is no way around it. Clients need leashes, and billing them hourly will keep the project from inflating and everyone is happy at the end.
When working directly with a client I bill per project. When sub-contracting with a design firm I always bill hourly. Hourly billing is the most fair way to bill and I wish it were viable to always go that route. But clients don’t like it.
That’s what the contracts and project scope is for. If you verbablly agree to some random job, then obviously you’ll get ripped off. But if you write everything out in detail, with no chance for ambiguity, then the scope will not change. At least not for free ;)
I determine the initial contract amount based on an assumption of XX hours x $$ hourly rate to develop the main website, for a set amount total. Once the initial site is developed & paid for, future maintenance is done at the hourly rate.
I sometimes end up going out of scope initially, but I’ve become pretty good at estimating things out, and I make sure to be very detailed in listing the specifics in the contract. This methodology has served me well for over 7 years so far.
Stepped rates. Works like this:
Say we estimate the job at 40 hours. Add 20% slippage, so we’ll say:
$100 per hour for the first 50 hours, best estimate 40 hours.
$35 an hour for every hour past 50.
Now, this is good protection for both parties. For the client, they have a sharply bounded risk – if the job goes over horribly, at least the excess is cheap.
For the developer, if something goes Horribly Wrong – servers fall over, backups fail, somebody goofs horribly and implements the wrong damn thing – at least the $35 an hour is enough to keep the lights on.
What’s interesting about this approach is that when things go wrong, both sides are **EQUALLY UNHAPPY** – the Client is paying for what they didn’t expect to pay for, and the Developer could be making a lot more money doing something else.
The result, in my experience, is that client-developer relationships are maintained even when things go wrong and jobs slip badly. I think that a similar approach could be taken to gigs on deadlines.
Thoughts?
I do the same thing but I charge a higher fee for monthly hosting + small updates. I make it extremely clear what I will include in the updates ie:upload newsletter. This way I can throw in small updates(not included in the contract) and they feel like they are getting something free. I charge $50-75 per month but keep the original design cost fairly low. This way the client can have an up to date website and I can stay in contact with them on a regular basis and get more work from them. One of the biggest flaws in a lot of small website is old information.
i set a fixed quote based on an estimate, but i break that down into an hourly rate for the client. i find this essential because many of the clients i work for (small businesses etc..) tend to see the web site as a product rather than a service – which it is in some ways, of course – but they will often balk at the price until they realise the man-hours involved in it. also, i like to keep things transparent for the client so that they know i am not just pulling numbers out of the sky.
Having read several of the comments I can agree wholly with the gentlemen who said it is best to first set a fixed price and then work maintenance and changes on a per job basis. In my experience, it’s always been better to make sure that the customer is satisfied with the initial product, then, if and when they want changes, they don’t mind paying for what they know will be quality service. Great post.
What do you do if there is something in your way?
Bulldozer
> Bulldozer
What if the thing in your way was a cliff?
Adapt.
I said Bulldozer rather tongue in cheek. You’re exactly right. Evolution has proved to work so far. Modify yourself to gain the competitive advantage. Don’t spend too much time trying to modify the universe around you … that’s a much bigger, harder, less fulfilling task than personal growth. Thank you for allowing me to so philosophically personify business.
You’ll never get rich by doing web design. As soon as you stop working, the money stops coming in. However you pitch it to clients, all you’re really doing is selling your time.
And there’s always a new kid on the block, straight out of school with a copy of Dreamweaver, who will charge less than you do in order to get work. This limits what you can charge. It’s a rat race.
I started doing web design and development in 1995, but I’ve finally managed to drop all my clients except my sister. ;-) Now the only websites I design are for myself, to make money while I’m asleep.
Of course there are some businesses that profit from web design, but they succeed because they’re run by people who’d be good at running any business. The basic rule is to exploit your employees by charging clients more than you pay them.
David
Sir David, you are so right.
This has been a low hanging fruit for me. I would greatly apreciate any advice you may have on this subject. Pls email off list if you would like. EMAIL :::at::: franklinlyons.com
cheers
Saw the presentation, loved it, audio would be radical!
Travis, I found the audio on Rapidshare.
Would love to hear or see this presentation. Can you throw it up for us Allen?