The Art of Estimating Project Cost
Ever wonder how agencies conclude how much to charge their clients? Good thing you’ve come here, then. We’ll walk you through the process. But first, let’s talk about the reasons for cost estimation.
Ever wonder how agencies conclude how much to charge their clients? Good thing you’ve come here, then. We’ll walk you through the process. But first, let’s talk about the reasons for cost estimation.
Why estimate project costs?
The proper cost estimating of a project is essential for several reasons:
- Your client can decide whether to work with you and invest the sum quoted in the estimate;
- You can understand your client’s expectations, such as their budget for the project;
- You can break down the project into smaller parts and see what tasks you need to assign to which team member;
- You can see what resources should be acquired or prepared for the project.
And of course, how much, more or less, you’ll get paid. It’s important to remember that this is, well, an estimation, meaning an approximate calculation of time and cost. It might, therefore, change, especially if you’re just starting as an agency and don’t have much experience in gauging project cost. If that’s the case, don’t worry — after going through this several times, you’ll be able to predict how much time and what resources will be needed.
How to estimate project cost
Let’s dive into what goes into the estimating process. While time might be the obvious answer, there’s much more to it than the number of hours you’ll spend on the project.
Time
We at CODETOWP.com gauge how many hours each functionality of the WordPress website or app will take, then add them all together. But a project is not just a product. Include the time spent on preparation — drawing up the contract, assembling documents, setting up WordPress environment — and communicating with your client.
Additional services
This includes purchasing any other services or materials, such as graphics. Maybe your client wants you to buy the domain and the hosting, then count that right in. Other things to consider here are more complicated undertakings, like organising a photo shoot for products page or meet the team page.
Testing
You test the product before handing it over to the client. You check for bugs in the code and errors in the functionalities of the application or website. You dot all the I’s and cross all the T’s. Make sure you include the time needed for this in the estimate.
Other things worth mentioning
Remember to think about elements not explicitly connected to the coding and testing part of the project. We’ve already mentioned the graphics and photo shoots. But what if the materials you get from the client are in the wrong format and you have to convert them? And who’s in charge of providing content for the website — will the client or your agency be responsible for that? If your project requires travelling, be sure to include any travel costs like taxi fares or fuel.
Your client can also ask you to provide further services, like the administration of their website.
Different methods of estimating
While the most common method of estimating project costs is per hour, there are other approaches, such as a fixed price with a blended rate (fixed fee). In this case, you and your client agree on a specific budget but include a 10-15% margin of error. This method works best in straightforward projects such as a simple WordPress website.
Project cost estimation might appear intimidating at first, but after several projects, you should be able to gauge the amount of work, time and resources with more confidence. Pro tip: if cost estimations still intimidate you, try to split them into smaller milestones (or functionalities, like us). You’re welcome.
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