Bidding Lesson - industry survey

I surveyed local Web Professionals regarding how they bid jobs, you may find their answers helpful

Craig Palmer - Employee of Sonoma County's Web Team and freelance Web Developer

1. What do you charge?
I will charge anywhere between $30 - $40 per hour, depending upon who the client is. If an individual is starting out and has limited resources, I am willing to reduce my rate on principle. I've done sites for free. However, I insist that in these cases, my investment of time and effort is an investment in advertising and networking. Choose your "free clients" seldom and wisely.

2. How do you estimate how long a task will take?
I have an inquiry form on my web site that I ask prospective clients to complete prior to our initial meeting. During that meeting, I need to carefully collect all the information I need to prepare a proposal ... number of pages, images, amount of content and images per page, forms, flash, etc. When preparing a bid, I make certain that it contains specific details of what is included (number of pages, images, mockups provided, revisions to mockups, how the content should be provided, etc.) and what can be charged at an hourly rate above and beyond. Estimating how long it takes depends entirely upon personal experience and dedication to monitoring your time. For bidding, I suggest determining a "per page" price for the first 5 pages at one rate, then a lower rate for additional pages. The higher rate for the first five should accomodate the time taken for designing mockups and building the template. (This formula should not be part of the proposal, but for your own estimation). Most clients like to know what it will cost them as opposed to paying an hourly rate unless they've already established a working relationship with you.

3. Do you have a sample bid we could review as a class teaching tool ?
4. What issues do contracts need to address?
I've attached a sample contract and related document that I obtained from a collegue. I also attached a sample proposal that may help. I would like to stay anonymous if you don't mind.

I hope this information is helpful. I continually have challenges when estimating costs for work because I know that clients can be unpredictable, and you never really know what you're getting yourself into. There aren't any easy answers. The important thing to do is to find out what your competition is doing and try to do it better for less (but not too much less). Offer something that the competition doesn't seem to consider. The bottom line is that you provide a service and a product, so make it the best that you possibly can with the resources you have available to you. And try to keep it simple and have fun in the process.

proposal.doc || ProjectSurvey.doc || WDContract.doc

Jason Ellis owner of a small Web development firm

1. What do you charge?
$55 for design (concept, graphics, consulting)
$45 for production (html production, html editing, html updates)
$35 for special cases and charity

2. How do you estimate how long a task will take?
i avoid bidding an entire job at once if at all possible. i bid in phases giving my hourly rate and a time estimate with a 2-3 hour stretch (3-7 hours etc.) instead of putting a dollar amount to it. they can figure the $$$ out if they want to.

phase 1: create design concept for website according to client specifications.
work will not begin until all design specific content has been received.
estimated time for client edits is assumed. actual hours will be billed for
upon phase completion. estimated time for client approval is 6-10 hours.
design rates are $55 per hour. client will be notified if time begins to exceed 1 hour of estimate.
please remit $225 to begin phase 1. (one half of max estimate.)

3. Do you have a sample bid we could review as a class teaching tool ?
this is an initial design bid for a current web client of mine

4. What issues do contracts need to address?
money
project scope
designer responsibilities
client responsibilities
deliverables

5 Any overall advice about this subject?
charge in phases whenever possible
bid in time spreads (8-12 hr) with your high # being more than enough of time
never apologize for your rates/charges
be confident and demanding
keep it strictly business with friend/family clients
wait till the end of a project to, "give a good deal"

6. Any Web resources you have found useful
http://www.freemacfonts.com/afonts.htm
http://www.craigslist.org/

Cindy Jenkins - Personnel Director PBHS.com

1. What do you charge?
Our company charges a fee per package which is limited by hours. Various packages have certain specifications and with the limitation on hours you won't under charge. If the client wants something not included in the package then price it out hourly. If it entails programming, charge a premium especially if you have to farm it out. For web site updates we charge $75.oo per hr.

2. How do you estimate how long a task will take?
Experience.

4. What issues do contracts need to address? If you have a sample contract could we have a copy to use in the classroom?

It's important to have clearly stated terms and conditions. Who owns the web site after it is built. Usually the client. It is not a good practice to give a client working files for a site you have built such as .fla files for a flash site. If the client has given you images for the site make sure you get indemnification.Are you going to host the site? If so, is there a minimum term? Definitely payment terms.

Here are the terms and conditions on my personal web site which are
for a web site package:

Small Business Special 1295.00
Search engine optimization and standard submission to top search engines. No warranties are offered of any specific results for standard search engine submission. Package limited to 20 hours total design time. Sites exceeding this time allotment will be charged hourly to complete site.

Package is only available with one year paid Basic Hosting.

Small Business Plus 2495.00
Search engine optimization and standard submission to top search engines. No warranties are offered of any specific results for standard search engine submission.

Package limited to 40 hours total design time. Sites exceeding this time allotment will be charged hourly to complete site.

Package is only available with one year paid Basic Hosting.

General Terms and Conditions

Shopping Carts and advanced search engine submission services are contracted individually on a case by case basis.

50% deposit of total cost due at time of order. 25% due 4 weeks after web design initiation. Design initiation occurs after all content and materials are collected from client such that the web site can be completed. The final 25% payment is due 8 weeks after design initiation. All web sites can realistically be completed within 8 weeks provided client is communicative with designer. If for any reason the web site will not be completed, a refund will be prorated as the difference between amount paid and the number of hours utilized times $ 75.00 per hour including pre-design initiation administration. Refunds will not be given after six months from date of the initial order.

All content and materials except stock photography are to be provided by the client. This package does not include copy writing or on site photography.

Designer is not responsible for any content provided by the client and cannot be held legally liable for any copyright infringement or other actions that may arise as a result of materials provided by the client.

Terms and conditions may be updated from time to time and are legally binding.

5 Any overall advice about this subject?
Post your terms and conditions on your web site and have your client sign them as well. Always cover what is and isn't included in the cost of the web site. Have the web site specifications clearly stated in lay terms and have your client sign them. If your client does not communicate with you, clearly notify them that you cannot move forward with out their input. People often expect that by virtue of them wanting a web site, it will simply come to be. do not build the interior of the web site until the client signs off on the site map and home page. Let them know that changes to the navigation or home page may incur extra charges.

Genny Engels - astaworks

The work I do is generally database development and programming, not website design. This means most of my clients are website developers who don't have programming skills, who are subcontracting work to me. My usual rates range from $35 an hour for repeat customers whose systems I already know, to $60 an hour for direct client work with my customers' clients who want one hour of work here or one hour of work there.

Many of my projects are on an hourly subcontract basis like this, but there are many exceptions:

- I set a lowball price of $250 for setting up a (very simple) database and order form for a retail client who ran a local small business, because I was hoping to get a successful example going of the particular service this used (having orders faxed from the server to a merchant who didn't use email). If I had stayed in business fulltime, this would have been gold for selling my services to other small business owners who are used to faxes but don't use email. There are lots of them in the county!

- One client specified the payment level as $500 a month or 5% of the client's net sales, whichever was greater. Interestingly, this turned out to be the most lucrative contract I ever got. First there was a period of about 20-40 hours/month of work and the minimum $500 a month (since the site hadn't yet launched and sales were zero). Within a year, virtually no work was needed, sales had taken off, and the 5% I received was $900 a month. This was only cut short by my getting a fulltime job and having to hand over the client to another firm. I suspect the 5% would be considerably higher now. Then again, the workload would probably have increased significantly, temporarily, during a massive system conversion they ended up having to do.

- I set a lowball price of $250 to provide a specific website feature for which I already had most of the code, on a subcontract to a relatively major local website design company. I was hoping to get more contracts from them in the future. Unfortunately, due to their change requests after the feature was delivered, I made about $5 an hour on that one, and because they weren't very pleasant to deal with, I didn't want to do any more business with them anyway.

Some advice about commercial online bidding sites: I have gotten several long-term repeat customers through bids I placed on ITmoonlighter.com and creativemoonlighter.com. I have gotten absolutely no results from elance. If you do decide to use online bidding sites, pay for the membership instead of using the free version (your bids may get to the client three days faster), and check AT LEAST once a day for responses and requests for information. Respond quickly. Spend a lot of time the first few months on getting your bid proposals together, but then reuse as much as possible and don't spend more than an hour or so on any new bid variations. I've wasted huge amounts of time answering detailed followup questions to the point where I am giving the job poster complete specifications, and then I don't get the job. On the other hand, I've gotten reasonable followup questions from people who turned out to be valuable clients. Set your own limits on what's reasonable, and you'll probably get some pretty good repeat clients.

Actually, on most of the projects I've done I haven't had to put in a formal bid document. I have used a format similar to the attached bid document to show the price, specifications, and so on when placing online bids, but in looking through a year's worth of bid documents most of them were letters to local merchants I already knew, who were considering websites, and in those cases the letters were very informal. If you were bidding for a government project the situation would be very different.

Attached are a sample simple bid, and three contracts:

Bid
Contract from hell
Contract from heaven
Contract from Nolo

- the contract from heaven (extremely specific on requirements and extremely loose on ownership of work product) - these were the people who paid 5% of net sales. The client wrote this contract.

- the contract from hell (extremely vague on content of work that could be required, and requires all work to be signed over to the client as their intellectual property) - this was from the subcontract job where I made virtually no money in the end. If at all possible, do NOT sign a contract like this. It means you can never reuse what you designed for the client. Again, the client (their lawyer, actually) wrote this contract.

- the contract from Nolo. This is from a Nolo Press book, modified to apply to the particular job. In this case, I wrote the contract based on Nolo's standard forms. There are Nolo Press books about the legal issues in software development and, I believe, specifically one about web development legal issues. Read them before signing a contract!!!

Advisor who wished to remain anonymous

1. What do you charge?
As you know, I'm just starting out, but my going rates are $25 per hour for maintenance, or simple content development, and $40 per hour for design and all other development. If I need to hire a subcontractor, I charge the Client whatever the subcontractor charges me plus 10%. I plan to raise my rates as soon as possible, but for now, I'll take it! My goal is $40 to $65 per hour. that will just about cover all of the time spent marketing myself, interviewing prospects, and writing proposals.

2. How do you estimate how long a task will take?
That's a hard one. I'd like to know the answer to that myself. Right now, I'm learning as I go, sometimes the hard way. Recently I did a small design job for a local Web developer. I had to come up with 2 first and second-level mock-ups. The rate of pay was $25 per hour and the time allocated to get the job done was 8 hours. It ended up taking me 16, and I was pleased to get it done that quickly!. I am getting faster, but apparently, I have a ways to go if 8 hours reflects the industry standard for 2 sets of mockups.

3. Do you have a sample bid we could review as a class teaching tool

4. What issues do contracts need to address?

5 Any overall advice about this subject?
I find it important to include examples of what ISN'T included in my contracts, in addition to what IS included. This seems to help define what the Client can expect, and eliminates some of the
potential for scope creep.

6. Any Web resources you have found useful?
For folks willing to pay for contract templates, you can check out Jurifax:

http://store.yahoo.com/jurifaxstore/contract-forms---modyles-de-contrats-internet---internet.html

Brian Petro - bpwebdesign.com

1. What do you charge?
We charge different amounts for different kinds of specialists
production level work (photoshop/html/easy forms/proofing) - $70/hour
programming - $150/hour
consulting regarding work we are going to conduct - usually free
consulting not regarding work we are going to conduct - $150/hour
writing - $100/hour

2. How do you estimate how long a task will take?
I rely on my experience and the experience of those working with me. If I'm not sure how long something will take I talk to the person who is going to conduct the work. I break projects in to small manageable blocks of work that can be estimated individually. For example, a simple website might include the following sub-groups:
A. Pre-Construction (meetings, consultation, co-ordinate regarding host access, domain names etc.)
B. Graphic Design (creation of mockups and changes to mockups in photoshop)
C. HTML template (creation of HTML template based on approved mockup)
D. Body of site (build out the body of the site and insert client content)
E. Post-Construction (meetings, training, proofing/changes, search engine submission)

Of course, any parts that I am subcontracting out are simple to estimate. Assuming that I am dealing with a subcontractor that I have a lot of experience with, I just write up a project description, get a quote from the contractor, and add my mark up. If I am dealing with a new contractor I usually get multiple bids and mark up the middle bid. If you use the low bid, and the contract flakes out you don't have enough money to hire someone else.

3. Do you have a sample bid we could review as a class teaching tool ?
My proposals and contracts are one in the same.

4. What issues do contracts need to address?

1. They need to define the project in as much detail as possible. Have a sitemap and describe what's going on each page. Describe how any dynamic parts of the site function. Describe the graphic design process and limit your exposure to excessive revisions to the mockup.

2. Describe the financial arrangement (get 50% up front)

3. Describe the legal arrangement. Who owns the site when you are done? What happens if the client fails to deliver all the content needed to complete the site? What if the client doesn't pay? What if there are legal problems between the client and the developer?
If you have a sample contract could we have a copy to use in the classroom?

Here's a sample of our financial and legal details. I am not an attorney and cannot make any guarantees about the contracts legal stability beyond the fact that it has served me well up to now.

Contract Details
The "client" will pay a 50% deposit by check written to "Web Developer" before site construction begins. The "client" will pay the remainder of the contract amount after site construction is complete. The remainder will also come due if Web Developer is prevented from completing construction due to a lack of content material provided by the client. Web Developer grants the client license to use on its' website any software in perpetuity that it has developed for the client for which it has received complete payment. Each page produced will contain a single unobtrusive link to Web Developer's website at the base of the page. Revisions will be limited to 2 submissions. Acceptance of this contract shall constitute an agreement by the "client" with all terms and conditions contained. In the event of legal proceedings between the "client" and Web Developer the non-prevailing party will pay all attorney and court fees and the venue shall be in the Sonoma County (CA, USA) court system. Should there be any collection expenses, the "client" guarantees payment for them. The signer must be an owner of or officer in said company and personally guarantees payment. The "client" warrants to have permission to legally use all content materials and designs that they provide for use on the website and hold Web Developer harmless should legal action arise concerning the website. Prices quoted assume that the website will be implemented on a competent, cooperative ISP that offers the services needed. This agreement will become void if not accepted within 1 month (30 days) from time of proposal creation.

5 Any overall advice about this subject?
Your proposal/contract is your blueprint for the project. That being said, for most small projects there is a good chance they are hiring you because they trust you, not because they understand the contract. As such is it likely that the client will attempt at multiple times through the project to stray from the contract. That is totally acceptable and is to be accepted. It is your job to keep track of what is in the contract and what is not. When the client requests something outside of the contract just be sure that they are aware that they are incurring any extra cost before you conduct the work. Also be sure to have enough breathing space in your proposal price that when a borderline request is made by the client that could be interpreted as inside or outside of the contract that you can be generous in your interpretation and include it without charging the client extra.