Jan. 29, 2021

What you might be missing in your estimates

What you might be missing in your estimates

💯💯💯 "If this is your first point of communication with a potential client, make it a good impression. Be detailed, be brief, be quick."


One of the difficulties of dealing with new clients is the first estimate.  How can I compute all the necessary information and quickly turnaround a professional and accurate estimate that respects both sides?  In this episode, I'm breaking down my strategy and how I focus on a client-centric experience.  The key takeaways...

  1. Be Detailed
  2. Be Brief
  3. Be Quick

Artrepreneurs:
@artrepreneurspod

Have a question that you want addressed on the show?  Get featured on the podcast by going to speakpipe.com/artrepreneurs and record your question! 

Transcript

When I first started my photography business. I didn't have any clue how to estimate pricing to a prospective client, let alone How to make that estimate professional looking and protective of my rights, and my needs. After freelancing for the past several years on my own. Now, while it's still not perfect, my process is significantly better than it once was. And I'm hoping this episode is going to help you improve the clarity of your upcoming estimates as well. So let's address, why this is even a topic of discussion in the first place. How important are they really?  Are they crucial, or are they casual, some photographers are going to say, all I need for an estimate is a price. So why make it more difficult than it needs to be well at its core, that might be pretty true. A client may only care how much your services cost so why not get to the point as fast as possible. But just because someone might zoom past all the terms on your estimate, and go straight to that bottom dollar first doesn't mean they won't appreciate the effort and thought put into the estimate. Keep in mind, an estimate is often the first point of communication, you're going to have at establishing a relationship with this client. So why not make a good first impression. I want you to consider three basic concepts when you're drafting your estimates. Number one, be detailed. The attention to detail will showcase the thought you put into your business and create trust with your client because of the transparency laid out. Think about this, if you asked for an estimate from a contractor to renovate your kitchen, would you be satisfied with one round number with no explanation. Or would you rather see a clear breakdown of billable hours, and an itemized list of material costs, always be detailed. If you can answer questions your client hasn't even asked about, they will automatically assume you have the solution. Number two, be brief, your estimate my opinion should have every question answered in as little writing as possible. The reason why I say this is because your point of contact the person asking for the estimate may not be the ultimate decision-maker on whether or not you get hired. They might just be the person tasked with getting the information from you, so that they can run it up the flagpole consider that that top boss may not even read the estimate, they may just ask the person on the phone. What is this contractor asking for. You want your information to be so easy that someone can explain it without showing them the details. Now I'm not going to lie. Creative Services that deal with usage and intellectual property. Don't make it easy on either part, the creative professional has to zero in on a consistent pricing structure with language that educates the client. The client has to sit there. Read it digest it and hopefully respected. It's not like asking how much for new brake pads at your local auto shop. The most common response photographers give when someone asks about our race is, it depends. That response is always frustrating to a client. So our job is to somehow convey a response in a cogent and concise manner that even an intern could understand. It won't be easy, but that should always be our goal. Number three, be quick, create templates, find your pricing structure so that you can get your estimate to your client quickly upon request. Clients are understanding that it may take a little time to get all your ducks in a row. But don't take that courtesy for granted, nobody really wants to wait three days to get a response, getting it back to them within 48 hours should be an achievable goal. Now if you're out of state on a job, or traveling or on a project that requires long hours. Let your client know that up front, and tell them that this will be priority number one, as soon as you're done. Just keep reminding yourself. Be detail. Be brief. Be quick.

4:30  
Now let's move on to the Central's in your estimate what information needs to be there. There are a lot of areas I want to discuss, so you may want to replay this again, or jot some of it down at your own leisure. But let's get to it. The first piece of information that needs to be clearly stated on this document is the actual word estimate. And I'm not trying to be funny here. A lot of pros simply don't include the word estimate. You need the client to know what this document is and what it isn't. It's not a bid. It's not a quote, certainly not an invoice. An estimate is an approximation of what the job is going to cost your client. It is fluid. It is amendable. Remember at this point in time, you may not actually have all the exact details yet. So the document is reflecting your basic understanding of the job. You may not know the exact size of the job, but you might have a rough idea of the scope of it. You may not know exactly when the deliverables will be needed. So you might project different timelines, but your goal is ultimately to manage the expectations your clients have. Number two, contractor and client info. Everybody's information, email, phone numbers, addresses point of contact. Number three, timelines detail the scope of the project is their pre production. When do you actually need the production date to be, how long will it take to complete and how long for the deliverables to be set for itemized fees. Let's talk about pricing for a few minutes here because this is really where the bulk of the information comes in. I like to be specific, so my client understands exactly what they're paying for some other photographers they like to just give one tiny number, and that is fine, so long as you have a consistent method in which you get to that number, and can articulate the breakdown. If they ask how and why. Now, I get to my rates by using three different fields. One is a creative the number two is a license fee. And then three is a production. So let's break that down. One, creativity, the creative fee is another term for the cost of your labor, how you get to that number is a deeper dive for another episode, as there are several ways freelancers find theirs. But for now, consider this your get out the door fee. What is it going to take for you to get out the door to the license for the usage fee. To me this is the most ignored area especially among photographers, and it's a growing concern for all of us. If you ignore the licensing or usage aspect, you're effectively only charging for your labor. Now, I don't know about you, but I do not consider myself just a labor, which is no disrespect to those who are. But I value my intellectual property and my copyrights, so my goal is to get publishers to respect that as well. And I do this by assigning a fee based on how the images will be used three production or reimbursement fees. This is currently an approximation, because at this point you haven't purchased anything yet. But you aren't estimating what production costs will be there for the project or example travel expenses are one of the most common production fees. Flights rental cars, hotels, parking rates, even gas mileage for your personal car. All qualify as travel expenses. Some shoots also require additional talent. Maybe you need an assistant, makeup, hair wardrobe. Second shooter or digital tax. If you need to hire anybody list that on the estimate. Another production fee would be locations. A client may not know that they have to actually rent out a studio or get location permits. It's your job to educate them. And if you have to do this and set this up front, you're going to want to list the production fees. And lastly, catering. Do you need food or beverage for everybody involved on the creative team. If you do list this in your production fee. Now I'm going to give you some bonus extra fees here that you might want to list depending on the scope of your project. So for instance, scouting and casting. This tends to apply to bigger projects or anything where the artistic vision, would require more attention to detail and preparation. Do you need to spend an entire day casting the right on camera talent. If you think the project might be the best with this. You're gonna want to add that to your estimate and cover all your bases just in case. Depending on the scope of your practice you may also want to add in a retouching fee. Now, not everybody charges for retouching. But if the job for me requires anything more than a basic preset application where I have to go into Photoshop I have to clear skin, I have to do adjustments and layers. I'm going to add this fee estimate, usually around half the value of my creativity. And lastly, a per diem would apply depending on the light project. If it's a four hour shoot, I'm not going to include, but if it's a full day or multi day shoot the per diem is very common practice. Basically a daily allowance for employees or contractors who are paid a daily rate. So after you've covered all your potential fees, let's move on to number five, I want to risk the cost of additional hours for requests. I love listing additional hours or requests because it sets the terms for your client, at any additional request of your time will come at a cost. Don't let your clients off the hook without letting them know that there's a cost of requested overtime. having a rate upfront on the estimate prevents that uncomfortable conversation on site about additional payment. If it's in your estimate, and they agree to it, you're good to go and can invoice them afterwards. Everybody wins. Number six, projected total. This is the number their eyes will search for first, so make it prominent. This is the estimated total of the entire production. Number seven, payment terms. Hopefully you set the terms, if someone is asking for your rate. So how fast do you want to get paid. You want net 15 that 3060. Do you want 100% upfront, or some sort of deposit, this is your choice. But if the terms are up to you. I always suggest getting as much money upfront as possible for positive cash flow. Number eight, late fees. I love late fee terms. It lets your client know that you're Pro, you should be respected as a pro. Have a late fee term clearly written on your estimate so that they know exactly what they're getting into it will help incentivize them to pay early. An example would be 5% late fee and payment not received 30 days after the invoice date. And lastly number nine, contractual terms. Now if you have a template already drafted, you can just copy and paste it and throw it. This allows your client to know everything that you're requested. What are the specifications on your usage rates. Your indemnification clauses liability selfies acts of God, etc. And so those are the most essential areas that need to be on your estimate. And when you sent it in the client is going to look the information over it either accepted rejected or counter the estimate. Don't get discouraged if the client asks for amendments, or changes, and certainly never taken personally. Each party is doing the best that they can keep in mind that each counter will null and void the previous estimate. When both sides agree, it is best practice to have both sides, sign the document and provide copies to both parties. So now that you know the basics of what to have in your estimates, and you recognize the importance. You might be asking, How do I build them. To me, there are two basic ways. First, you can manually create your own template in a Word document, and customize it for each client. I recommend this method for photographers who don't really get asked to provide estimates that often. If you receive maybe just one two or three requests a year on your rates might be just fine creating these on your own. The downside of course of doing this manually, is that it takes longer. It requires a little bit more structure and an organizational system so that you can store these versions and access them as easily as possible. For those who are providing estimates rather frequently. I suggest looking into paid accounting software such as fresh books. This speeds up the time responding to your clients. I'm not receiving any affiliate income through them so this is just a product that I use, and believe in. And it's really helped me save a lot of time over the years. But whatever your system is just remember the concept at the beginning of this episode. If this is your first point of communication with a potential client. Make it a good impression, be detailed be brief. Be quick.

12:45  
Alright, so that is going to wrap it up for this episode folks, thank you so much to all you entrepreneurs out there for tuning into this program. If you've enjoyed the content please subscribe on your favorite podcasting service and share this episode with other creatives just like you. Wishing you guys will have a great day and keep on creating.