how-to-estimate

How to Estimate Costs Like a Pro (Even When You Don’t Feel Like One)

Freelancing is fun, right? Glamorous, even. You get to rock your own schedule in a non-traditional format, and call your fuzzy slippers a “work uniform.” Dream-gig.

A good freelancer, however, knows it’s not all glamour. Figuring out how to estimate project costs, notifying clients of higher rates, and chasing down missed payments? Important, absolutely. Glamorous? Not so much. And that’s okay.

Let’s look at it this way. Did you ever play “house” when you were younger? It was a fantastic way to dream. You had a framework based on what you knew, and had the freedom to embellish it the way you wanted. Ice cream for breakfast? Absolutely. Video games instead of school? Heck, yeah.

You knew on some level, though, that your fantasy version of “house” would never actually work, not completely. You didn’t know how to pay bills or mow the lawn, and you barely knew how to make mac and cheese, so you just kept on playing, and it was great.

In freelancing, you can play house for a little while. You can dream and plan. You can start up a blog or a website, fill it with great content, and start submitting work to as many places as possible… but when someone offers you money for something, that’s where “house” ends and “real life” begins.

One of the inevitable moments of “freelance real life” is when your potential client asks for an estimate.

Wait, an estimate? Oh, jeeze.

In this moment, if you’ve never actually worked up an estimate for someone, it’s important to not freak out and sabotage your professionalism. Nonchalantly tell that potential client, “Absolutely, I’ll work that up and get back to you,” wave “goodbye” to your game of house, and take a step across that real-world-threshold.

Let’s walk through the process of an estimate, shall we?

Figuring out how to estimate the value of your time and work can be tricky, but not impossibly so… I promise.

We’ll start from the top. A potential client has stumbled upon your website, loved it, and would like an estimate for a certain project. These are all good things, even if they make you a little nervous. So… where do you start?

The details. You start with the details.

The key is to obtain as many project details as you can from the potential client, so that you can provide an estimate that is as accurate as possible.

Exactly what will you be delivering to the client as a final product or service? What is the timeline that is expected of you? How much will this cost you in supplies? Does the job involve travel and consequential mileage costs? How many revisions are you willing to do?

When creating an estimate, remember:

Communication.

One of the most underestimated parts of the freelance process is the communication portion. In order to maintain the quality of your work and satisfy your client to the best of your abilities, you’re going to need to communicate with them. When we’re talking about creative work, there is often a lot of back-and-forth via email and phone.

Time spent on the phone with a client or at coffee shop meetings is time that could be spent working on other projects, and is time that you deserve to be paid for.

Track your time.

Don’t roll your eyes at me! I’m serious. Time-tracking is a giant stepping-stone on the journey of learning how to estimate your worth. Here, I’ve got a real-live story for you:

I was once approached by a potential client about a monthly agreement. Our family’s financials were not spectacular at the time, and I was practically salivating at the prospect. This potential client was presenting me with a stable monthly income, and I could barely contain my excitement.

The monthly rate they offered was too low. I randomly asked for $100 more. It was granted. I was ecstatic.

Flash forward, six months later.

At this point, I had gathered more clients and had actually done research on copywriting rates. I had a real-live rates sheet that I could easily send over to potential clients, and was feeling like a professional. After working a lot on a few posts from this initial client, I thought it might be a good idea to actually look at the numbers. Once I finally sat down and looked over everything, I realized something that made me nauseous:

 

If I had been charging this client what I should have been charging, I would have made $2700 more than I had in the past six months. $2700? That equaled three of our rent payments. Six months, six months of groceries.

 

This wasn’t the client’s fault. This was mine. I took a wild stab out of desperation (and a little laziness, if I’m going to be honest) and shorted myself on incredibly useful dollars.

Don’t make my mistake. Track your time. The options for time-tracking are plentiful, easy-to-use, and often free. Toggl, Harvest, and RescueTime are some of the top apps and websites that allow you to monitor the time it takes to complete necessary project tasks. Either try one of these options, or whip out a legal pad and start recording. You can use this information to figure out how to write an estimate that will take you from an accurate project proposal to a binding online signature.

What if you’re new?

It’s easy to say “Go track your time!” to someone who’s been in the game for a little while. They can immediately start tracking things they’re already working on, reflect on past projects, and go from there. When you’re new though, figuring out how to estimate work-time is not so simple… but that doesn’t matter. The answer is still the same:

Start with the details.

-List out your entire creative and administrative process, including everything from initial client emails to final revisions. You may not have concrete experience, but if you’re going into business for yourself, you’ve at least got to have a vision for your process.

-Include each proposed detail of the project, being sure to account for things like mileage and material costs. By outlining each step and cost of the project, you’ll be able to invoice confidently and avoid project scope creep.

-Make your best guess as to how long each stage will take. Everyone has to start somewhere, and if you’ve put forth the effort to assign an estimated time to each stage of your process, you’ll be far more accurate than simply throwing out a number.

-Determine your rates. Whether you want to charge by project or by the hour, it’s a good idea to figure up your ideal hourly rates and give yourself a basic framework. We’ve got a handy hourly rate calculator that can help you with that.

-Put it all together. Include a project description in which you can write a paragraph or two about the scope (and value) of the project, then create an itemized list detailing each stage of the process and its associated cost, ending with an estimated total.
There are hundreds of templates available online, or you can create your own in a word processor. Either way, be sure to convert the estimate to a PDF to ensure that the document doesn’t get altered in some way.

About all that “real-world” talk:

If you’re still playing “freelance house,” don’t let all this talk about the “real world” make you feel less-than. Playing house isn’t a silly phase; it’s a necessary stage in becoming a freelancer. Playing house is where you dream and explore and make crazy plans that you can build a business on.

Once you get those plans nailed down, detailing your process shouldn’t be too hard. A solid process will help you figure out how to estimate your costs, establish your rates, and satisfy your clients.

All from the comfort of your favorite fuzzy slippers.