Scoping and estimating professional services can be hard work.
It’s an important skill for professionals to cultivate, as clients are increasingly demanding alternatives to the billable hour. And alternative pricing options are tricky to work through and develop if you don’t have a good understanding of your real costs to begin with.
We see many firms, when asked to provide costs (or even an estimate), pluck a number out of the air without a clear and agreed scope and deliverables. And then they hope they won’t have to write-off time, or deal with unpaid bills, and will somehow still be profitable.
So it helps enormously if you really understand what it typically costs you to produce and deliver work.
Once you have a handle on the scope and costs, you can use the information to help work out fixed fees, event costs, capped fees or other alternatives.
Scoping made simple
- Break work down into sensible project steps and components.
- Specify the inclusions (and, by implication, the exclusions) at each stage.
- Make reasonable assumptions about how many resources/how much time, and record them next to each component.
- Let the client see how much is involved in each part, and the estimated/fixed cost of same.*
* You may wish to show your client a high-level version, rather than all the nuts and bolts.
This gives you a sound basis to:
- work through any budget the client has formulated
- collaboratively work with your client to manage and reduce cost
- allow your client to choose what to proceed with – components that you will do, or that they can do economically
- help your client understand when something isn’t a 10-minute job
- get agreement up-front on how variations to scope will be dealt with.
Set out below is a simple example of how to work out a scope, based on a takeaway pizza business.
Scoping professional services is not as simple as making and delivering a takeaway pizza, but the example illustrates how, once you break elements down and consider likely options, estimating and scoping work can become easier.
Managing scope creep of course is far harder. But, by having your pricing scoped, documented and agreed, you’ll have a better chance of resolving issues with your client.
Get in touch if you need help with scoping and pricing for your next project, tender or bid.
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Remember, nothing is so complex that it cannot be explained simply Albert Einstein was spot-on when he said “nothing is so complex that it cannot be explained simply”. Tenders, bids, proposals, and informal pitches for business are not times to show how clever and capable you are by using legalese (I’m looking at you lawyers), […]