https://twitter.com/edavis10/status/365499060095959040
Do you have a minimum value for any new projects? I know I do and my current minimum for new projects is $2000. It’s fine to say that but why exactly do I have a project minimum, and why should you set one?
Setup Cost
First, there is a minimum cost to setting up any client. You have to enter their information in your billing system and set them up in your project management system. Those are just base admin costs for any client and you need to recoup them. Setting that project minimum can ensure that you do.
There is also a cost to context switching on a bunch of small projects. Each time you have to shut down one project and pick another one up it takes extra admin time. Taking fewer projects at a higher cost means that you have less context switching and thus less time is wasted so more time is paid.
I’ve also found that setting a project minimum helps weed out the projects you just don’t want. You know the local business owner that really just wants you to push some pixels around and add content for them and be at the end of the phone every second of every day. If you have a project minimum you weed them out right away.
That means you weed out the 900 phone calls about an image change that needs to happen ‘now’. You don’t want them anyway so set a minimum and stick to it.
But I have excuses
You will get clients that want you to waive the minimum rate for them because “I’ll have more work in the future that will be above the project minimum”. I’ve heard that for years (across construction and programming) and I can’t think of a single time that the client actually had more work. In fact most of the time they were a terrible client anyway and I didn’t want to work for them ever again.
I’ve had the same experience when I’ve heard “I’ve got lots of friends that need XX and I’ll send them to you.” The friends never materialize and you got stuck working on a project that you didn’t want to take anyway.
Existing clients
Now notice I’m talking about ‘new’ projects. My project minimum typically doesn’t apply to existing clients. I’ll hop on something for them that only takes a few hours. They are already set up and since we’ve done a project before I know how good/bad they are at communication.
The only time I bring up project minimums to existing clients is if they are in my lower 20% and I want to stop working with them anyway. It can be a great way to end the relationship without any hurt feelings. Ending projects with grace is important to keep a solid reputation.
The hard part
The hard part about project minimums is that you may have to say no to some awesome opportunities. As I type this I have a great opportunity to work with a developer I respect on a project that I use and enjoy but it doesn’t hit my project minimum (or fit with weekly billing) so I’m going to say no.
Sure I could say yes since it’s my internal policy and I only have to answer to me about it but I set the project minimum for a reason and that reason hasn’t changed because of the opportunity.
It can suck to say no but you need to remember that saying no to something today enables you to say yes to something later.
So you need to set a project minimum and stick to it. You will be so much happier as you work with better clients. You will be more profitable as you kill context switching.
8 responses to “Do you have a project minimum?”
I call clients who promise more lucrative work in future if you’ll do their first project on the cheap “carrot danglers”. If that next project ever materializes, you can bet the client will want you to do it for peanuts too. That carrot is always just out of reach! These clients are seldom worth the effort, and certainly not worth the discount.
I vet new clients using a “project planner” questionnaire, and right at the top of it I state my minimum budget. It’s a great way of weeding out prospects who haven’t budgeted adequately.
Have you posted the ‘project planner’ questions anywhere for others to learn more about vetting clients?
Yep, I have it available on my portfolio website:
http://f6design.com/files/F6_Design_Project_Worksheet.doc
Awesome thanks for sharing.
I think one of the best things about this article, other than the great content, is that it gives an actual number ($2,000). A lot of developers are real sketchy about openly discussing pricing for some reason. +1 for transparency!
I teach a bunch of financial management courses and bring my actual budget books for the last 2 years and let people look through them. I’m pretty open about my rates and my bank account.
Neither has much bearing on my actual worth as a person. Once you can divorce your worth from money it gets pretty easy.
Great piece. I’m debating on waiving smaller jobs for existing clients as well. I’ve charged them (o)ver(l)y favorable rates because there is a value in knowing what is client is like, having a long term relationship and knowing what the collaboration is like in advance. To be quite honest I’m always apprehensive taking on someone new when you don’t know what they are going to be like.
But the impact of task switching on small jobs is something I consistently have underrated. The other problem is that I have the occasional low budgety client from the beginning days when I charged very low rates. It’s very hard to charge them the newer rates when you have such a long relationship and you know what their budget is like. But this was a good reminder to reevaluate those.
Another thing I’ve noticed is that clients – if they refer business to you or actually deliver on the ‘more jobs to come’ promise, these people and projects tend to be in the same league budget wise. So there really is very little upside in keeping existing clients who can’t afford to grow with you.
For the low budget clients, you NEED to be continually dropping the lower 20% of the work. I just tell my clients that I’m raising my rates as of 2 months from now and any work that doesn’t have a deposit before that time gets charged at the new rates.
I think that you are severely handicapping your earning potential by not bringing them along with you.
From when I started at $50/hr I have 1 client that is with me at my rate of $100/hr. Only existing GOOD clients get access to me at that rate. Clients that were a pain get week rates no matter the size of the job. 2 hours of work = week rate for bad clients. It costs so much extra to serve them.
It’s scary to drop clients sometimes, but it needs to be done to really grow your business.