I would never bill a client for the time it takes me to build a proposal, and I would think way less of any contractor who suggested I pay for their proposals. Don't do this. Research for quotes and proposals is in almost all cases a cost of doing business.
The last company I was at completely turned around when we stopped begging people to let us do their proposals and instead started charging them for the privilege to have us analyze their business, create actionable guidelines (that they could conceivably have anyone implement) and provide a quote for what our services would cost to implement them ourselves. They were welcome to take that strategy plan elsewhere, but when we started charging people for it, we had more clients than we knew what to do with.
People start to see you differently when you value your time, ideas and strategy and don't just give them away. Yes, there are some cases where it's worth doing one gratis, but the vast majority of time, we got more business by refusing to work with people who didn't run through our proposal process.
I am making a tactical point, and you are making a strategic point.
Strategically: of course you should structure your interactions with clients so that you are paid for your time, ideas, and strategy.
Tactically: avoid being that firm that wants money just to provide a proposal.
We are literally just talking about different ways to word things.
And while I totally believe your firm "turned around" once you started asking people to pay to get proposals, in my universe, the first purchase order you get from a client comes with multiple weeks of legal negotiation over an MSA. Nobody is going to do that casually.
I've had clients with only a vague idea of what they actually needed, meaning that we essentially needed to design the product before we could quote it. We charged a nominal fee, which was discounted from the project if the proposal was accepted.
It doesn't depend on the case; it's a question of how you frame the project.
If you need to design the product before you can estimate it, you propose a design project. You should propose to produce a design deliverable; you can offer your client a price break to skip that deliverable and plow ahead into implementation.
Or, you can quote the project "blind" but structure it so that the client bears the risk; for instance, by quoting a fixed number of billable weeks with a "if you tell us by week N, you can get more contiguous weeks at this rate" clause.
Or, if the client is really worth having and the project is good, you can do enough design work to do a realistic proposal gratis, which is what we invariably end up doing, because we don't do projects that aren't worth doing that for.
But in no circumstances should your proposal itself be perceived as having a price tag. One consultant did that with us once and I had to talk my parters down off the wall against ending communications with them right there.
> If you need to design the product before you can estimate it, you propose a design project. You should propose to produce a design deliverable; you can offer your client a price break to skip that deliverable and plow ahead into implementation.
I guess this is ultimately what we did (had they turned us down on the main project, they would have walked away with the design spec). That's the standard policy now.
Yeah; I think I sounded pretty pedantic back there, so let me just say I don't think you're suggesting anything wrong. I'm just saying, I've seen fledgling consultants accidentally let themselves be perceived as billing for the proposal work, and I'm pretty sure that's a big mistake, worth calling out.
I've ran into a lot of scenarios where a client doesn't know what they want, and creating a proposal for them involves more of my time than it should. So as a result I'll offer consulting for a fee in order to come up with their ideal solution. This in term gets me most everything I need for a proposal as well as helps them to know what they are actually looking for.
The value add of consulting ends up working way better than directly charging for a proposal.
Based on the rest of this thread it looks like you're main objection is the wording I used (proposal versus some sort of preliminary design). So it boils down to marketing essentially.
I'm just one person and I'm fairly busy so I can't afford to spend the time screwing around with potential customers who are looking for free spec work. There's actually a significant number of people who heard about this web 2.0 social startup awesomeness and want to spec out their amazing idea with no intention of ever paying me.
It usually goes something like; "I think it'll cost around $xxxxx but I can't guarantee that until I've spent a good amount of time breaking it down into it's features with you to reduce risk for both of us and make sure you're getting something you really want."
It's at this point that I require an investment from them. It might not be a huge investment but it's generally a combination of compensation and their time (answering questions etc.).
I guess I just see most projects as more of a partnership to build something great. They bring the domain knowledge and I bring the programming / architecture know how. I won't partner with anyone who hasn't also committed their money, time, and resources. It sets a bad precedent to the relationship and they'll never value my work.
Everyone does things differently though, and I appreciate you're feedback. I don't think we're so far apart based on you're other comments. I stick by my recommendation, but feel free to reject it ;)
My segment of the software market doesn't require that I bill people to develop specs/quotes, but honestly, some types of software involve so much research related to the company, 90% of the project worth is figuring out what needs done, not the doing.
I do suggest that as a general rule for the OP, don't do this is a good idea.
"Cost of doing business" ... which eventually winds up being factored in anyway. I prefer the transparency that comes with listing how much I'm charging for the estimate as a line item w/in it. If they choose not to move forward, then no charge, else I treat it as billable time that lands in an invoice.
Comments
I would never bill a client for the time it takes me to build a proposal, and I would think way less of any contractor who suggested I pay for their proposals. Don't do this. Research for quotes and proposals is in almost all cases a cost of doing business.
I respectfully disagree.
The last company I was at completely turned around when we stopped begging people to let us do their proposals and instead started charging them for the privilege to have us analyze their business, create actionable guidelines (that they could conceivably have anyone implement) and provide a quote for what our services would cost to implement them ourselves. They were welcome to take that strategy plan elsewhere, but when we started charging people for it, we had more clients than we knew what to do with.
People start to see you differently when you value your time, ideas and strategy and don't just give them away. Yes, there are some cases where it's worth doing one gratis, but the vast majority of time, we got more business by refusing to work with people who didn't run through our proposal process.
We probably don't disagree.
I am making a tactical point, and you are making a strategic point.
Strategically: of course you should structure your interactions with clients so that you are paid for your time, ideas, and strategy.
Tactically: avoid being that firm that wants money just to provide a proposal.
We are literally just talking about different ways to word things.
And while I totally believe your firm "turned around" once you started asking people to pay to get proposals, in my universe, the first purchase order you get from a client comes with multiple weeks of legal negotiation over an MSA. Nobody is going to do that casually.
I think this might depend on the case.
I've had clients with only a vague idea of what they actually needed, meaning that we essentially needed to design the product before we could quote it. We charged a nominal fee, which was discounted from the project if the proposal was accepted.
It doesn't depend on the case; it's a question of how you frame the project.
If you need to design the product before you can estimate it, you propose a design project. You should propose to produce a design deliverable; you can offer your client a price break to skip that deliverable and plow ahead into implementation.
Or, you can quote the project "blind" but structure it so that the client bears the risk; for instance, by quoting a fixed number of billable weeks with a "if you tell us by week N, you can get more contiguous weeks at this rate" clause.
Or, if the client is really worth having and the project is good, you can do enough design work to do a realistic proposal gratis, which is what we invariably end up doing, because we don't do projects that aren't worth doing that for.
But in no circumstances should your proposal itself be perceived as having a price tag. One consultant did that with us once and I had to talk my parters down off the wall against ending communications with them right there.
> If you need to design the product before you can estimate it, you propose a design project. You should propose to produce a design deliverable; you can offer your client a price break to skip that deliverable and plow ahead into implementation.
I guess this is ultimately what we did (had they turned us down on the main project, they would have walked away with the design spec). That's the standard policy now.
Yeah; I think I sounded pretty pedantic back there, so let me just say I don't think you're suggesting anything wrong. I'm just saying, I've seen fledgling consultants accidentally let themselves be perceived as billing for the proposal work, and I'm pretty sure that's a big mistake, worth calling out.
I've ran into a lot of scenarios where a client doesn't know what they want, and creating a proposal for them involves more of my time than it should. So as a result I'll offer consulting for a fee in order to come up with their ideal solution. This in term gets me most everything I need for a proposal as well as helps them to know what they are actually looking for.
The value add of consulting ends up working way better than directly charging for a proposal.
Based on the rest of this thread it looks like you're main objection is the wording I used (proposal versus some sort of preliminary design). So it boils down to marketing essentially.
I'm just one person and I'm fairly busy so I can't afford to spend the time screwing around with potential customers who are looking for free spec work. There's actually a significant number of people who heard about this web 2.0 social startup awesomeness and want to spec out their amazing idea with no intention of ever paying me.
It usually goes something like; "I think it'll cost around $xxxxx but I can't guarantee that until I've spent a good amount of time breaking it down into it's features with you to reduce risk for both of us and make sure you're getting something you really want."
It's at this point that I require an investment from them. It might not be a huge investment but it's generally a combination of compensation and their time (answering questions etc.).
I guess I just see most projects as more of a partnership to build something great. They bring the domain knowledge and I bring the programming / architecture know how. I won't partner with anyone who hasn't also committed their money, time, and resources. It sets a bad precedent to the relationship and they'll never value my work.
Everyone does things differently though, and I appreciate you're feedback. I don't think we're so far apart based on you're other comments. I stick by my recommendation, but feel free to reject it ;)
My segment of the software market doesn't require that I bill people to develop specs/quotes, but honestly, some types of software involve so much research related to the company, 90% of the project worth is figuring out what needs done, not the doing.
I do suggest that as a general rule for the OP, don't do this is a good idea.
"Cost of doing business" ... which eventually winds up being factored in anyway. I prefer the transparency that comes with listing how much I'm charging for the estimate as a line item w/in it. If they choose not to move forward, then no charge, else I treat it as billable time that lands in an invoice.