Working with clients to understand costs

[cloutierlisa]

Hi All, 

My name is Lisa and I am new here at Upwork.  I was laid off from Verizon in November where I worked as a data engineer for 15 years.  I have a broad range of skills including network engineering, automation programming, scripting, and statistical data analysis. 

My issue currently is that my clients who hire me for custom automation work do not seem to understand the length of an automation project.   A simple project may take one to five hours.  A more complex project similar to one I've done before might take 10 hours.   A complex script I have never written before might take 15-20 hours and there is no way really to determine the length of time.  

When I can't make a reasonable guess as to how long a project will take, I ask the customer to let me evaluate the problem for 2 hours so that I can give a better picture of how long it might take.   I thought this was good practice and would help customers understand the costs.  However, it doesn't seem to help much.  Instead they get upset about the range of time (say 3-5 hours) to complete the script and they think that is too much money.  At the end of every evaluation I state that I'm always concious of my clients' budgets and I never charge for hours where work is not performed.   I also tell them to contact me if they need to make alternative arrangements and that I will work with them. 

I had a young lady contact me last night about the top range of my hourly estimate (which I was sure I would not hit, but I have to build in some cushioning) and she said she had a budget and complained that I had already had her pay for two hours to evaluate it!  Well actually the evaluation took about 30 min and I worked on her script for the rest of the time. Either way, I asked her budget and pointed out that I still had 3 hours more to work on the project at that budget.  She calmed down and was happy.  

I'm a generous person by nature and I have to be careful of being "too giving" with the clients.  However, I want to try to help them understand that just because I have a lot of experience, dropping me into the middle of a script that somebody else wrote is not going to magically fix anything, especially when the script I was given doesn't run. 

I would really like some ideas to work with the clients better on this issue.   I am absolutely willing to work with them on costs and will absolutely keep their bottom line in mind when I am working.  However, if they severely limit the time I have, I may inadvertently hand them a script that doesn't work. 

Suggestions are welcome!

THanks,

Lisa

[versailles · Accepted solution]

Lisa, I know squat about your industry, however, after having spent few years using Upwork and talking to other users, I can provide some insights about this marketplace.

Roughly, there are two markets on Upwork. Actually this may vary from one industry to another, but I think it is reasonable to say that the marked here is tiered.

There are low-quality freelancers and clients and there are professional ones. Lower quality clients are here to seek a price, not a service. Some think online freelancing platforms are places to get work done for rock-bottom rates, maybe because someone told them that they hired a data entry agent in India for less than $3 per hour, so they believe it is how this works. Also there are wannabe entrepreneurs with no money to spend. There are freelancers to cater for those clients, but that's not you.

Then, there are professional clients who are served by very skilled freelancers working for higher rates. Obviously, both high-end clients and freelancers are in limited supply.

The key is patience. You have already managed to get jobs at your hourly rate and it looks like you are really doing well for someone who just arrived on Upwork! Your profile is brilliant and while as I said I don't know much about what you do or about how crowded this segment is, you seem to have good potential.

While you're here, have you read this? Getting Started on Upwork, if you haven't yet, read it all!

[cloutierlisa]

Thank you for the explanation Rene!  I really appreciate Upwork and the chance it gives people to give freelancing a try without making a huge commitment up front.  For the most part I feel positive about the interactions I have had with clients.   

I was not aware of the tiered system (but not surprised).  I couldn't even get my own boss to understand how complex some of the automation projects I did while I was working for him.  

Automation takes a LOT of testing.  That's just the deal.  Otherwise see "script that may not work". 

My goal in my freelancing life is to bring the corporate "big guy" tools to the little guy, so that smaller businesses can benefit from things like virtualization and automation that large companies have been using for years.  

I have read all the Upwork documents, thank you!

[dalandanux]

Hi Lisa,

I transitioned from the corporate world to freelancing in mid-2012 myself - would be happy to show you the ropes.  I'm actually a former member of oDesk and Elance who didn't land any work on either site.  But in 2015, I went back to what was, by then, Upwork after the market I was targeting for my UX consulting services essentially dried up.  Freelancing on Upwork isn't my only income stream, but it's a significant enough part of it for the site to be worth my while.

Here are some strategies that I find work here:

• Pick a specialty: When I launched my first website as a freelancer in 2012, I was a burned-out software developer who didn't want to write code anymore.  My first freelance website marketed me as an information architect / interaction designer who could also do code reviews and QA testing.  That's the equivalent of Oil Change and Pizza.  I landed much more work after I started to market myself as a UX strategist/designer who has extensive enough development experience to communicate well with developers and understand what can really be built.
• Understand what the marketplace is like here: Upwork does have a "race to the bottom" reputation (regarding pricing), which is slowly going away but still partially deserved.  I still see clients for UX projects that pay an average of a few dollars an hour.  There are some really great clients here who don't think that way.  Most of the clients I end up working with have these traits:
  
  • They're either new to Upwork or have hired at least one person who charges roughly what I charge.
  • They've worked with people like me before - whether in their current business or in a previous job.  It doesn't have to be a 100% match and probably shouldn't.
  • They never leave a bad review of a freelancer without a great reason.
  • They're usually either based in North America or are a large global company.  (Your results may vary.  In general, pay a lot of attention to the client's location.)
  • They're great communicators in chat and/or calls.
  • They write detailed job descriptions that clarify what they need done and who they are.  You should be able to do some research on the company or at least understand what industry the project is in.  If a client writes a one-sentence job description saying that they're looking for a skill, it will get mobbed by cheaper offshore workers, who are probably who they want to hire anyway.
• Show what sets you apart from other freelancers: I spend most of my profile bio on this.  A few key differentiators: my first language is English; I'm based in the US (so there are minimal time zone discrepancies in most cases); I think a lot in terms of my work's business value and ROI; I've been published by a range of reputable technical blogs; and I learned user research directly from two of the biggest names in the field.
• Interview your clients: Even when we really need the work, the interview process needs to go both ways.  We need to see how good of a fit they are for us, and vice versa.  If you're working for clients who are a good fit and executing well on your projects, the confusing Job Success Score metric which countless freelancers in this forum pay too much attention to will not be a problem for you.
• Offer a project roadmapping service: The biggest problem I encounter here with prospective clients who don't hire me is that they give detailed quotes from me to cheaper freelancers.  In other words, they get something of value out of me without paying me for it.  As relatively senior people who both work on highly customized projects, roadmapping can give us more of a barrier for clients who do not really intend to hire us.
• Don't do quotes upfront: When you submit a proposal in response to a job posting or a copy-and-paste interview request (i.e. not an invite only job post), there is no relationship yet between you and the client.  Submitting a detailed quote at that stage is probably a waste of effort.  So I send proposals or interview responses which show that I understand the client's specific problem, but they are not quotes.  Quotes come after a consultation call where I can get a sense of the probability that the client will hire me.
• Consider standardizing smaller projects: I've experimented with posting minimum prices or price ranges on Upwork, but ultimately I decided to mention them in my proposals only on a case-by-case basis.  You're right to say that a 2-hour quote for a 5-hour project is probably overkill in the eyes of the client.  However, good clients understand (like we do) that it is important to plan even a short project.  UX is a buzzword that gets notoriously misused in job postings.  I see some clients posting projects like "give me wireframes for 10 pages for $200".  I never respond to those because, in addition to the low budget, it's clear that they don't want me to follow any kind of proper research process.  (In UX, even saying upfront that a website will have 10 pages is a big assumption!)
• Consider fixed-price engagements: These can be pretty tricky to execute in a way that benefits you (especially in fields like software development).  But clients for these will at least not micromanage your timesheets like your client did.  It works well for me to give my clients both an estimated number of hours and a fixed price - and then say in the quote that any work that goes beyond the estimated hours may be considered out of scope.

Good luck!

David

[cloutierlisa]

Thanks for the reply, David, I know that was a lot to write!  Everyone on earth (not complaining, just saying) keeps telling me to specialize to one line of work.  The thing is, all the skills that I have DO relate to the same kind of work, just different aspects of it.  That's how I got so good at all of them in my previous job.  I agree with you about vetting clients, but I've actually had a good experience on that front.  I take fixed price work.   I also do limited hourly work, which is essentially fixed price.   As long as I don't feel the client will be too demanding or will try to cheat me, I will usually take their offers if they are fair.  

I'm really hoping that I have enough cross-talent to make enough to freelance full time.  My desire to return to any kind of corporate work is absolute zero at this point, but we'll have to see what the future brings.

Thanks again,

Lisa

[tlsanders]

Lisa, I don't know your industry, so I'm not disputing your point about the way your skills relate. I have no idea.  I do want to explain a bit what those who are urging you to specialize are getting at, though.

I'm a writer. In my career, I've written and edited in marketing, parenting, music, local news, religion, law, politics, social commentary, business management, legal tech, med tech, medical and dental, real estate...you get the point.

It's all writing. 

Yet, when I narrowed my focus on Upwork to writing legal content for attorneys, legal marketing agencies and legal tech providers only, I was able to nearly double my rate and have so much work that I don't anticipate being able to take on any new clients for the foreseeable future.

Rene mentioned the two markets on Upwork. One element of that is that many clients in the upper market come to Upwork because they are looking for a very specialized skill that no one on their team has. They are paying for an expertise they can't get in-house. And, a narrow focus generally sells expertise better than a range of services.

Some people do well with broader offerings. But, for many of us, being the one go-to person for a niche skill set that few others can offer the same level of expertise in is the key to success.

[cloutierlisa]

Hi Tiffany,

I absolutely am not disputing that for the majority of people in the majority of roles, finding a niche and specializing in it is the way to go.  

The reason I am keeping my options open, for now, is to see what the market is for my skillsets on this website.   As of now, the hits seem about equal in most categories and I've gotten jobs in different categories.  I have energy for new projects that differ greatly from each other.   That's my "right now" take on things. 

My "later on" take on things may be that I need to focus in one area and stick with that so I can make more money.  That's fine and I will do it if necessary.  

I appreciate your input!

[browersr]

Lisa - Your plight is a common one in the overall development space. This is the primary reason I will not take on fixed bid projects at all. The reality is that in the corporate world clients would spend some hours with consultants (or much longer) going back and forth over specs. In many instances the client does not have the proper expertise to explain their requirements or needs fully. After such a lengthy exchange, the consulting company will provide a fixed bid with a generous margin built-in to protect themselves from the risk. When invariably there are changes required to scope (for good or bad reasons) there will then be further discussions regarding whether the change should have been in the original scope or what the new scope will cost. Personally I will pass on this enormous waste of everyone's time particularly on a platform such as this where freelancers cannot take the hours necessary, free of cost, to make a true attempt at getting to a real cost. Now if something is very small or very repeatable, then fixed bid can work well. 

Clients have the very real need to understand project costs and feel comfortable that they aren't going to spend a lot of money without a sense of where things will end up. Towards that end my counsel to all clients is to set a time based project but use the max hours per week setting to enforce budgetary control. With a new client I tell them to set a very low number of hours based on their comfort level. Let's say that's that 5 hours. I tell them to use that time in gauging how effective at communication the freelancer is and whether they feel progress makes sense for the hours spent. Do they feel the freelancer is explaining things well? Answering questions with candor and with a sincere desire to impart helpful information? Are they helping to flesh out scope and project size? Are they alerting you to potential issues or roadblocks they might foresee from their past experiences, etc. If things are going well they can continue with a tight leash on hours or relax it as they desire. If you bump up against those hours for a given week you can politely inform them that they can extend hours thus letting you continue working or that you'll simply await the next week. As a software developer I routinely provide videos of progress and push code to a repository they own so that they can get hands on their investment.

In the end I am never afraid to lose a potential client if the deal isn't right. I am never rude or demanding. I advise them on what I feel is the best way to handle the contract and respond to their questions with honesty. If it's just not the way they want to go, I wish them well. Respect yourself as a professional who needs to make a fair wage for work performed and expertise given. If you don't, clients won't. 

[cloutierlisa]

Hi Scott, 

I have taken the route of using small numbers of hours to help my customers feel that they have some control over the situation and to see that I'm producing work for then even with minimal.hours.  It's one of the reasons I set up the 2 hour evaluation process.   In general I find that sometimes it works and sometimes it doesn't.   I don't push clients to do anything that makes them uncomfortable, and that includes hourly work.  

Right now I'm trying to take things a day at a time and work on honing my skills with customers.   Obviously over time that will shift to higher charges and likely more professional clients.   But everyone has to start somewhere!

Thanks,

Lisa

[wendy_writes]

Lisa, I understand next to nothing about what you do but neither do most clients in need of your skills.  You wrote "... to bring the corporate "big guy" tools to the little guy, so that smaller businesses can benefit from things like virtualization and automation that large companies have been using for years."

As a predominantly website writer - use this concept in the first line of your profile!!!

Scott's suggestions and approach make a ton of sense (and a lot of what he wrote is applicable to all categories).

[browersr]

Lisa -

I did read that you were giving 2-hours to help frame the project; however, I personally wouldn't take that route as a matter of course. The problem is that you are creating the expectation that there is a 2 hour project that will produce a specific time estimate. Maybe it will or maybe it won't. Chances are it will lead to more questions and it won't help with scope creep on an on-going basis. Instead frame it as an activity that will take place throughout the project and will be something you will discuss as you progress through the project. They key is to get started on the actual project and show the quality of your work and communications. This doesn't mean you cannot discuss estimates but it will be a more natural part of the project's progress while giving the customer a chance to control things through weekly limits. Otherwise as the client I may be thinking that I need to pay the freelancer just to learn how much I need to pay the freelancer!   

The only time I have broken with the above is when asked to do a feasibility assessment. I will do those on occasion as a fixed bid with the intention of explaining how a customer may need to tackle the development of a given project and some of the issues they should be aware of. It's not uncommon to give very high level range estimates but always with the strong caveat about 10,000 foot level assumptions. 

I cannot say this enough, but the key to success here is constant communications with the client. A brief note of check-in, uploading code to the repository, and status reports (informal). I have yet to have an experience, in the 2-years I have been on this platform, where that wasn't enough. The second they realize they are dealing with a professional that cares about their project, things become much easier. 

[bobafett999]

Lisa:

Welcome my fellow Texan and good luck to you.  You do have a strong skill set.  I kind of peripherally know your space and all I can say is that do not undersell.  What you offer is high value added product (of course the bosses never understand anything peons do). And be cautious about some of the fishing for 'bottom of the barrel talent' clients.  Your end product once delivered can be easily stolen - so put in some safe guards.  On hourly projects if you have used time tracker your pay is almost guranteed.  On fixed price projects client is the king - experienced 'squeezing' clients know that the 'rating leash' they carry is a premium to a freelancer.  And still at the end of the day if they refuse to pay there is nothing you can do (yes you can fight but it will cost you $300).

[gerrys]

I work "extra" hours just so I don't have to commute; sit it an office; etc. etc.

It's not about filling the time allotted / budgeted.

I would never consider handing off something "that didn't work" because I "ran out of time".

That's for game shows; not how you run a business. You need to improve your estimating and swallow your bad ones. If you can't estimate what's on the table, only bite off what you can (estimate).