Estimate your project costs for better and more profitable proposals

Being a freelancer is good sometimes, but some other it is a pain in the ass. As hard as it sounds, yes.

You are not only running your own business, which is great, but as usually you’re the only person that takes care of everything, you have to get more clients, do all the paperwork and, of course, work. Also, you’ll be the designer as well as salesperson, copywriter and accounting department. But this is all to make your business running.

But there is a point where every freelancer struggles: project costs.

This will be one of the biggest concerns when starting a new business. And this is important as will help you setting up your rates.

Being honest, it took us a while to set up our rates. But once we learned to calculate our costs efficiently, that was the very moment when we started running a real business.

Set your rates using your costs

If you want your proposals to succeed (and being more profitable for you) you need to set your rates considering your costs.

The point for this is that if you know your costs, you are in total control of your offer. You’ll know the exact return of any project and you won’t be losing either time or money. That is, less frustration and issues while working with your clients. Remember: they’ll actually know you’re losing money with your projects. We are clients too and do always know when our contractor is not running on profits.

Which costs should you be considering?

First things first. Identify which costs will be fixed costs and which ones will be variable. Fixed costs remain no matter your activity is (rent, salaries), while variable costs are the ones depending on your activity, such as taxes or operational expenses.

Understanding costs

If you need to identify and calculate your costs, read carefully our advice:

• Describe the project properly.

Don’t write only about the actions. Write about the process, the stages and don’t forget to figure out which parts of your company will be involved in each of them. And tell your client about it.

Start from the bigger to the smallest, from general to particular so it’ll be easier to figure out the costs for each part.

• Prices per hour.

Yes, this is the best thing you can do. Calculate all your own personal (and employee) costs using a price per hour base. This will help you on each and every project.

• Time estimation.

This is key for any individual. If you estimate your time wrong, you’ll be losing a lot of money. There is no magic formula for this, so use your own experience to estimate workloads.

But, that said, we have an advice that works for us: keep a diary of all your projects. On it you will register all the issues you faced and you’ll get all the causes and how you solved them so you can avoid repeating them. Also, it’ll be your own guide to compare projects and evaluate if that project worths your time and resources. Or not. Your very own Hitchhiker’s Guide to the Galaxy.

• Working with external collaborators?

Ask them. Do it. Do it again. Ask over and over again. Ask them about their tasks, how they will be involved on the project, their workload and tolls they will be using. You can’t afford wasting time and money because of a wrong evaluation from a third party.

• Add a margin (or markup) to all your rates.

We told you that you no matter how well you will estimate your workload, you’ll be spending some few more hours in some projects. And this makes a good idea adding a markup percentage or a margin to all your rates. Or at the total net price. Use it as a risk rate 🙂

3 ideas to start with

Figuring out all project costs can be difficult sometimes and there are some expenses that are not so easy to identify and some other can be hidden. Here we’ll be bringing you some proposals that have been created considering all costs for each item or rate.

Corporate WordPress website

Analysis:

• Client meetings: US$80/per hour x2hr
• Senior UX/UI designer: US$70 per hour x4hr
• Project Manager: US$100 per hour x4hr

Design:

• Senior designer: US$70 per hour x 8hr
• Junior designer: US$50 per hour x 20hr
• Stock images: US$6 per image x 6 images

Development:

• Junior programmer US$50 per hour x 50hr
• WordPress theme: US$60
• High quality WordPress hosting: US$200 per year
• Domain name: US$10 per year

SEO strategy

Research:

• Marketing Manager: US$70 per hour x 5hr
• Senior developer: US$70 per hour x 3hr

Fase de Desarrollo de la nueva estrategia:

• Marketing Manager: US$70 per hour x 20hr
• Junior Copywriter: US$70 per hour x 10hr

Execution: 

• Junior Copywriter: US$70 per hour x 10hr
• Senior developer: US$70 per hour x 50hr
• New hosting: US$180 per year

Online Offline PR Strategy

Online Comms Plan:

• Senior journalist: US$70 per hour x 5hr
• Junior journalist: US$50 per hour x 10hr
• Keyword research: US$2000
• Facebook Ads spend: US$4000
• Twitter Ads spend: US$3000
• AdWords: US$12000
• Blogposts: US$100 per unit x10

Offline PR Plan:

• Press releases: US$175€ per unit x3
• Radio ads: US$150 per item x5
• Press ads: US$2,500 x5
• Junior journalist: US$50 per hour x 10hr

These are some not-so-fictional examples to start with. Of course, the more people get involved in the project, it’ll be way more complicated to research and review al costs, but take this is our final remark: analyze your projects, identify stages and compare new vs old ones.