Client Relations
Working within the budget: An estimate is an estimate
When you put together an estimate for a job according to a set of specifications and deliverables, the understanding is that, under normal circumstances you would invoice your client for the amount that you have estimated – give or take a little here and there. An estimate is, after all, an estimate: a prediction of labor, material, and service costs based on one’s best guess.
Sometimes situations arise unexpectedly that can cause certain expenses to go over what was estimated. But not all overages are the same, nor are they all managed the same way. For example, what is the difference between an overage caused by, say, additional shipping expenses compared to an overage caused by your client asking for work to be done above what was agreed to in the estimate? What if you decided to experiment with a new technique on your own and ended up committing several days more work than you estimated?
What are your strategies for communicating with your client about these overages?
Working within the budget
Since you were the person who submitted the estimate according to the specifications, it is your responsibility to inform your client when a situation arises that threatens your ability to adhere to budgetary constraints. You must always advise your client in advance of making expenditures that are over budget so that they may make the decision to commit to the overage or not. You cannot advise your client about overages after the expenditures, in either material or labor expenses. Otherwise, you will end up eating those costs yourself.
Before inquiring further about this issue, it is important to identify the different types of overages that can occur because some overages are handled differently than others. For example, if you have allocated $250 for consumables (objects that would be used specifically for a project and not reused) and your client requests, say, an additional disk drive purchase for a duplicate backup, you would advise your client that this would be an expense above what has been allocated. They may give you verbal approval for this new expense (as opposed to requesting a new estimate) because this is a relatively minor expense. They would therefore expect to see that overage indicated when you send your invoice at the end of the job and they would not dispute the cost.
What about a situation where they ask you to go into a different creative direction that requires additional labor than what you had originally estimated? What if your client asks you to create two versions of the final master, such as a final master and then an alternate version with a different scene in it? How do you handle this kind of situation?
From a business standpoint, your response should always be positive. You always want the additional work from your client. However, you must make it clear to your client through direct communication (preferably in a form that is documented, such as in an email) that what is being asked for is above the specifications for the original estimate. In short, your response should be stated something like, “I’d be glad to put this together for you. Would you like me to send you an overage estimate for this additional work? This sounds like something that is beyond the original deliverables. Is that correct?”
Your client needs to be in a position where they can make decisions to spend more money if they want to. At the same time, you need to protect yourself from being asked to do more than what was originally agreed to (which is commonly known as “scope creep”).
Client Relations Scenario
You are working on a job where your client stated that there is a tight budget – there isn’t any room for overages. So far, the job has gone according to plan.
However, an opportunity then arises where your client’s supervisor states that she wants a second version of the final deliverable that uses some different scenes, a slightly different voiceover, and a different set of graphics. When your client conveys this request to you, it is with an understanding that it was the client who initially stated that there was no room for overages. However, your client is now requesting additional work with no additional funds to pay for it.
You reply to your client that completing the alternate version would entail significantly more labor and an additional cost for an alternative voiceover. Her response was that there still cannot be any more overages than what was originally estimated.
You need to make a business decision here. If you state to your client that you are unwilling to do the additional work, there is a possibility that you will establish a reputation in your client’s mind that you are not flexible, which puts you at a competitive disadvantage for future jobs. At the same time, you don’t want to establish a reputation as a professional who can be taken advantage of.
What do you do in this situation?
The situation requires a strategically designed decision based on what is more valuable to you down the road in your client relationship – especially since there are ramifications for sustaining your business. Some of the extra work requires additional “hard expenses” (money out of your pocket, or a reduction in your profit) though some of the costs are just your extra time.
Response – Please copy/paste the questions below in the Canvas discussion response
The situation requires a strategically designed decision based on what is more valuable to you down the road in your client relations – especially since there are ramifications for sustaining your business. Some of the extra work requires additional “hard expenses” (money out of your pocket, or a reduction in your profit) though some of the costs are just your extra time.
List the variables you must consider in this decision and provide an explanation of your approach.
State what you will say to your client according to the above scenario. What do you anticipate will be the consequence of your decision?