Last week I posted about how much custom WordPress websites should cost. If you read that post, you know that it depends. Generally the feedback was fantastic, but many readers took from that post that they should raise their prices.
I mentioned in the post that I’ve worked on web projects ranging from $1,000 to $100,000. What I didn’t note is that I’ve made just as much — or more — profit per hour on $1,000 websites as I have on much more expensive projects.
Revenue is not the same as profit
Projects that cost a lot of money can break you just as easily as they can make you. We should consider the value of our projects based on not only the revenue, but the profit potential.
If I can perform a $1,000 project in 5 hours, including project management, I’ll do it. Every. Day.
Who doesn’t want to make $200 an hour? That’s a pretty great rate. I would rather do ten of those projects versus one $10,000 project that gets out of hand and takes 400 hours — 10 full time weeks isn’t that crazy of a number — where I end up making $25 per hour. It’s obvious, right?
Now think back to some of your projects. Have you created websites for $1,000? $3,000? $10,000? $30,000? More? And at what price point did you find yourself to be most profitable? What made it so?
Qualities of profitable (small) web projects
In the last post on pricing, I talked about the client multiplier for project management. It was mostly well received, and I got a lot of “Oh, man, I need to do that.”
And that’s probably because people could relate to projects that get out of hand and end up being expensive.
Great Project management
So, project management is obviously a huge factor for making projects successful. But project management isn’t something that only the client can screw up. We — as consultants — can very easily bungle a project. And it’s our responsibility to make “easy” and “difficult” clients successful parts of our web projects.
Either way, we need to make sure to keep project management a minimum. We can do this by automating tasks — check out Jennifer Bourn’s interview on WP Elevation for some great tips on this — and ensure our client isn’t going to require a lot of hand holding.
For a $2,500 project, if you’re charging $100 per hour, keep project management to fewer than 5 of those 25 hours. If you can’t do that, charge more or turn down the project.
This morning I listened to the latest episode of Businessology — a fantastic podcast if you’re into posts like this — and they started their series on onboarding clients.
Onboarding clients well is hugely important. Unfortunately, it’s costly. It takes time, and if you don’t price the client until after you onboard them, then that’s sunk cost into your business.
So you either need to price onboarding into every project that makes up for the projects you lose, or you need to charge for that time.
Proper onboarding for small web projects can be pretty simple. Essentially, you need to “lay down the law” and set expectations very, very early. I’m going to use a $2,500 budget for my example onboarding. That could go something like this:
I’m really excited about the opportunity to help you for this project. Unfortunately, your budget is quite low for what you’re hoping to achieve, so we’ll need to do as much as we can for the limited amount of time we have. So, I’ll set some ground rules and you can let me know whether you are okay with these limitations:
- I require 50% down before we start and 50% once the work is complete. When you launch is up to you, but I’ll need final payment once development is complete.
- We will have a 1 hour kickoff. At this kickoff, I’ll expect you have some things ready for me to review. I’ll send you that list soon. We’ll talk on the phone and do a screenshare, and the call will be recorded.
- I will present the design to you in three to four days. We cannot delay this meeting. The presentation will be on the phone and will last about 30 minutes. You’ll have time to make requests for changes only. You’ll have to trust me for the overall direction the project is taking. If you choose you cannot accept the designs, you can cancel the remainder of the project and not be obligated for the second payment.
- We will perform the development within 2 weeks. Once we are done, we will deliver it to you via a staging website on our firm’s server, with the content you have pre-delivered to us as a base. You will then have 1 week to alter that content and request changes that are within the scope of the project.
- If you have not completed your end by that time, we’ll request the final payment and can deliver the database and files to a location of your choice.
- If you are ready for your website to launch at this stage, we’ll launch it for you on any pre-approved host (we have some we can’t work with), or we can send you the database and files so that you or your internal team can launch the new website.
- The final 50% of the payment is due before launch or file delivery. We cannot do either unless we’ve been paid for the finished work.
I understand these may sound like tight restrictions. However, if we do this, I’ll be able to deliver a lot of value for your budget. If you’re not okay with this setup, we can alter it to fit something that works better for you and your organization, but we’ll need to adjust the budget to account for the changes.
If this doesn’t work for you, then we understand completely and appreciate you contacting us anyway.
Have a great day.
So what did we do here? We set the standard. This standard may change for you and your deliverables and the price may change, but you should be able to get the picture.
One thing I hope you noted is that the email (hopefully) has an air of authority attached. The client should know that they’re playing by our rules, unless they want to pay more. I’ll happily play by a client’s rules if they’re prepared to pay me to play that way.
However, authority should not require rudeness or lack of respect. The goal is to establish authority while sounding like a considerate professional.
Get it in, get it out
Nothing is more costly than a project that drags on. Even if you don’t work on it as it drags on, the cost of it being on your books and not getting final payment is significant to the point of making it unprofitable.
When working on a small project, it’s enormously important to make sure the client understands the limitations on the timeline. You must set a schedule, hold the client to it, and stick to it yourself.
If you let a small project drag on, you’ll start to dislike it as a project, you’ll hate it being in your spreadsheet or other project traffic software, you’ll start to forget the details and scope, the client will lose patience and start demanding more, and it’ll drain your organization.
If the client takes a long time to decide to work with you after initial contact, that’s a red flag. If the client has multiple stakeholders for approval in their organization, that’s a red flag. If the client clearly has poor assets and content on their current marketing materials (print or web), that’s a red flag.
All of these things will affect your timeline. Adjust prices accordingly, even if it means you lose the job.
Finally, do the job in the time you said it would take. Nothing good will come from delaying. Make sure you have the resources to complete the small project in the amount of time you said you would, and do it.
Your agreement for the amount and kind of work you’re going to do for a small project is paramount. No loose ends are allowed, because if one falls through the cracks your profitability is gone. Be very careful to use your experience to your advantage here. Remember some of the same kinds of things as last time:
- Is there an existing site that needs content migration to the new site?
- Does the client have the ability to recognize “good” design from “bad” design.
- Do they want you and are ready to do what it takes to work with you, or are they just shopping for price?
- Is the proposed new website relatively small, and can the types of content be easily quantified? Do you already know how you’ll achieve the technical parts within budget? If not, either figure it out or charge more.
There may be more things, but just be sure to look out for things that could affect your limited scope.
And if changes come once papers have been signed, require signed change orders, even if you decide to do the change for free. I also learned this from Businessology, and Dan learned it from Happy Cog, if I recall correctly. This establishes to the client that changes are significant and deserve highlighting. It creates “scope change equity” if you will.
Don’t reinvent the wheel
For small web projects, you need to keep the tasks to those where you are not reinventing the wheel.
Need an events calendar? Fine, but use a pre-built plugin that requires little to no custom development or design added. The same goes for any other type of content. Make sure you have the code in your own toolbox or know where to get it.
With a 25 hour project, you don’t have much time for potential rabbit holes.
The other way to not reinvent the wheel is to only target small websites within specific niches. I’ve done this myself. One of my friends is a political consultant. He asked me if I could help. I was wary, but I decided to help him. In the end, we decided to charge his clients $1,500 each and split it in half.
So I accepted a job where I was only getting paid $750 per website. That’s ridiculous, you say. And you’re right. It is, if I didn’t take precautions.
But in this case, I never spoke to a single client (he did all the direct contact since he was already advising them), and I built the same functionality and repeated it for 6 different websites. Then I customized the styles to fit the client’s brand, and we launched it on a single hosting platform, where the variables were known.
So I was able to build websites for $750 that were quite respectable hourly rates for me.
Always be closing
My coworker, Pete Mall, always jokes (except he’s totally serious) by saying “ABC”. ABC stands for Always Be Closing. It’s purposefully not Always Be Selling.
Selling is expensive, and closing is good. This is especially important for small web projects.
If you only do small web projects, you need to be able to keep a steady stream of incoming clients, and you need processes for managing these relationships.
If you’re looking for great people to learn from for managing projects like this, I definitely recommend learning from Bill Erickson, who has done a lot of systemizing in this arena.
Do it for free
When you charge someone money for a website, the mindset changes: you are serving them, and you have an obligation to do so. There’s nothing wrong with this mindset. The problem is , even if the client is your friend, this person now values you for whatever you’re charging them.
So let’s say you take this $2,500 sample project of ours and do it for $500 because you care about the website in question, or the stakeholder behind it. You may have just made a big mistake.
If you quote them $500 for something worth $2,500, you just told them that your exceptional service is only worth $500.
Instead, I learned a trick from Dan Mall (or I think it was Dan). What you should do is put the $2,500 price on the invoice, and then discount it to $500. Now their mindset has shifted, and know they are getting a great deal, and they are more likely to treat you like you deserve to be treated.
My other note on this is that you could also do it for free.
With certain non-profits or friends of mine, I’ve opted to do it this way. Now the expectations are that there are no expectations. I tell them I’ll do it for free and that I’m the decider and they can take it or leave it; and people don’t turn down free, no matter the limitations.
If I do a project for free, I still like to say what my services are worth in similar situations. And when I do this, I typically strengthen my relationship and get a great testimonial (that are great for paying projects!) because they are so happy to receive my services.
Small projects aren’t bad
Small projects aren’t bad. Unprofitable ones are.
When you’re quoting work, you may decide you just don’t want to do projects under a certain price — and that’s totally fine. I actually think that it's generally easier to sell lower priced projects, and harder to manage them effectively. It's just so much easier to use your buffer in small projects and go into the red. Whereas you have more room for error with large projects, but they are harder to sell.
Personally, every now and then I want to be able to do a small project if it’s something I think I’ll enjoy or can have a great impact on.
For these scenarios, it’s important that we don’t give away our services for less than they are worth, but it doesn’t mean that we have to say no.