How to Determine What to Charge a Client

When it comes to pricing a project for a client, businesses do not always enjoy the luxury of receiving a detailed RFP. Often a request for services is simply documented in a quick email. Regardless of how clients submit requests for services, they are usually unaware of all the details required to effectively meet their request-and these details are often where many of the costs lie.

Are you aware that approximately 70% of consulting agencies under bid for projects? Why? Typically, agencies do their best to come up with a fair and accurate price, but oftentimes their proposed costs are literally a shot in the dark. The problem with this is the fact that once agencies quote a price for a client, they are then unable to negotiate up. Obviously, this can result in the loss of a substantial amount of potential revenue.

So how does one ensure that a project is accurately priced? There are essentially three basic pricing structures to determine costs: time-based, value-based, and results-based. Time-based pricing is the traditional method. The most critical tool for time-based cost determination is an effective time and project tracking system that allows you to assess the scope of your projects. Since the scope is what drives the cost, hitting that cost mark can be very difficult. Therefore, it is essential that a proven time and project tracking system be used. With this approach, you can:

• Accurately estimate the scope by segmenting the project into phases, tasks and sub-tasks. The user can go through each task and sub-task and identify which resources will be used for each task, as well as determine internal and external rates. You can also determine how long each task and phase is going to take and what it will cost. Once you assimilate all the tasks, you should have a grasp on the total scope of the project: You can then adjust your cost model for customer communication, project management and other overhead.
• Integrate time and project tracking software with Microsoft Project.
• Get a snapshot of the overall status of your projects, and assess whether or not your projects are on track. Select any project, task or sub-task and instantly view how it's progressing relative to budget and schedule.
• Have powerful, customizable reporting at your fingertips to answer all of your clients' questions in real-time, including the reports you need to back up your responses.
• Use it as a tool to learn from your projects. As you move from one project to the next, you can use the information to plan and implement future projects-- constantly improving your process and the accuracy of your cost estimations with each project you complete.

Don't be one of the 70% who under bids for projects! Incorporate a time and project tracking system into your business processes today. Learn more about what Standard Time Timesheet Software can do for your business needs.