Bidding Lesson - main page taping of lecture

Video of class

How to Bid a Job
I will review bidding techniques for the first hour.

Finally we can discuss $$$. Many of us gain a sense of "personal satisfaction" and "creativity" by designing Web sites, but you have to pay the bills. Because this is such a new industry there are no firm standards for what to charge. This should change as the industry matures and the client becomes more educated regarding the Web. However for the client and for the web designer the question remains - what is the ROI (return on investment) for my web site? Very few companies can afford to have a web site which is beautiful but ineffective in either generating revenue, increasing productivity, or minimizing costs.

I will review 3 techniques which you may wish to choose from when bidding a job.

  1. Time and Materials (designers love it, clients hate it).
    You have determined that your hourly rate is $40.00 per hour and the client just writes you a check for the # of hours you work each month, plus any materials you must purchase. Clients may feel uncomfortable with this arrangement unless there is a cap placed on the budget.
  2. Bid the project (clients love it, designers hate it)
    You take a look at what the client wants, determine that it will take 100 hours, pad another 20%, and multiply 120hrs. X $40.00 for a bid of $4,800.00. A payment schedule should be implemented. For example 4 installments of $1,200 each with the first payment coming in before work begins is a workable option. The major concern is that you may dramatically underestimated the time needed to complete the job. Another difficulty arises when the clients keeps changing their minds, if significant changes are being made - negotiate a change order fee.
  3. Develop pre-packaged web sites which clients can choose from. This works best for the simple web site or the extremely cautious client. The customer can see what they are getting up front and budget accordingly. A problem arises if the client wants to expand or change the project. Once again any changes need to billed at the hourly rate. It is best to advise the client of this policy during the initial meeting.

In all of the methods mentioned above you will need to determine what your hourly rate is. This can be done by following these steps.

  1. Determine how much money you would like to earn per year.

  2. Determine your yearly overhead expenses
    Software $2,000
    Hardware $1,500 set aside for a new computer every 3 years
    Advertising $1,000
    Travel $500
    TOTAL $5,000

    Total Income 55.000

    How many hours can you bill for each week (it will not be 40 hours per week because many hours will be spent dealing with clients in non billable interaction such as talking, pitching your services, dealing with bookkeeping, etc

    Say 20 hours per week for 50 weeks= 1000 hours billed per year

    divide 55,000 by 1,000 and you get 55 per hour which is high for a rookie.

    You can reduce your rate and work more hours (but billable hours are hard to come by when you are new) of you can reduce your income goal.

  3. I encourage you to read the articles I have included on bidding a job. Later on in the semester you will need to send the project manager a description of how many hours you have worked on the project and a projection for how many more hours you will need to complete the project. Also include the cost you feel your time is worth. This will be your "bid estimate".