Freelancing Fundamentals: Proposals and Pricing

Proposals & Pricing

Does the thought of creating and submitting a project proposal leave you quaking?

Never fear! This part of a freelance project isn’t as fancy and official or scary as it seems. It may just seem that way because you’re not familiar with drafting a proposal or maybe you’ve seen a big, intimidating version of one.

Some proposals run forty pages deep, and others are four pages long. I can relay cautionary tales about elaborately constructed, wordy proposals, but I won’t. I’ll just leave you with the upshot of, “Don’t become one of them.”

Dog meme saying much businesslike! So language, such thorough, very effort

Sure, you want to present something well-rounded and professional that covers all the bases. But unless you’re pitching a gigantic job that’s labor-intensive and fetching top dollar, work to keep your proposals lean. The adage about time being money is correct. You don’t need to spend so much time prepping a proposal that you end up playing Pac-Man with your profit margin.

Laying the groundwork for a proposal

A guy gets down on one knee and proposes marriage. She says yes and the happy couple float off into married bliss. First, comes proposal, then comes marriage.

But what comes before the proposal? In the case of marriage, we’ll assume there’s a lot of time spent dating and getting to know each other. It’s not that different in business…

The relationship mindset

As freelancers, we can use proposals as a way to build trust before a relationship exists. They also pave the way to further business with clients who have already made an appearance on your roster. When dealing with return clients, it’s not unusual to do away with formality and use a deposit along with a “handshake” proposal to get the ball rolling.

If you want to create an effective proposal (and a return client!), have a relationship mindset instead of a transactional one. Make the process of submitting a proposal a mere formality toward the end of your sales funnel: It shouldn’t show up until you’ve done solid research and discovery, collecting all the information you can.

Think of a proposal as the natural resolution to a conversational sales cycle. Have a half-dozen or so exchanges with your prospect before inking it. If you’ve done your job right, clients will view the proposal as a mere formality, and something that’s easily signed off on.

Premature Proposal Syndrome

Lots of businesses think of proposals as something they should do from the jump, just after they have a couple of emails or calls with a client. Don’t be that guy.

If you’re an eager beaver and fire off a proposal without all the information you need, there’s a high chance of it getting shot down. Skip that. It’s in everybody’s best interest to do as much conversing and discovery as possible before whipping out the proposal.

By the time we send a proposal, we’ve already had several conversations with the main decision maker or the team who’s in charge of the project at our client’s end. They already know our names, they already know how we price things, and the proposal at the end of the process is mostly a formality or a pleasantry, something to get sign-off on. – Justin Sainton

That’s because you want to make sure you have an understanding of:

You should also make sure the client understands both their actual needs (vs perceived needs) and what you can do for them that justifies the dollar amount presented. There’s no faster way to kill new business than to get ahead of yourself: Hit them with a number without the reasoning behind what went into the quote and they’ll balk.

I’ll go over the basic elements used in a proposal in a bit. Let’s start with pricing the project first because that’s a proposal’s function: “Here’s what I can do for you and how much it costs.”

How to figure pricing for your proposal

There are three basic types of pricing you can use when quoting a job for a client.

Before we get into those, though, you’ll need to know what you bill per hour for your services. If you need help landing on what your hourly rate should be, see How Much Should I Charge as a New Freelancer? I wrote that because over time I’ve learned (sometimes the hard way, ouch) all the things that factor into how a freelancer should determine an hourly rate.

Okay, now let’s go over the pricing models you can use in your client proposal.

Hourly pricing

Hourly pricing means you’ll state your hourly rate and how many hours you expect it’ll take to do your work. If you’re using the hourly model, make sure you don’t short-change yourself when estimating the hours needed for a project.

A decent rule of thumb is to figure up your time, then pad it by 25% to account for the unexpected. If you think the job at hand will take eight hours, then take one-fourth of that and add it back to the base number to arrive at your final figure.

Fixed bid pricing

Project rate pricing does what it says on the label: You take your time into account, make an educated guess about how many hours the project will take, then deliver a flat-rate quote using the resulting figure.

Add 25% to this, too, because there will nearly always be unexpected time sucks or needed resources that crop up. That’s just the law of averages

Many freelancers don’t start out using this pricing model because they’re feeling their way around and learning what it takes in time and materials to accomplish project goals. Over time you’ll learn ways to work faster and leaner. As you gain experience and confidence, fixed-rate project quotes are a great way to go.

Value-based pricing

Value-based pricing is the practice of quoting a flat rate based on the perceived value to your client. It’s a pretty misunderstood pricing model overall, and it’s the one that requires the most research before diving in. The flip side of that is that it tends to leave the least amount of money on the table.

Some clients will make using this pricing model easy because they want what they want now and they have the dollars to pay what you ask without much scrutiny or hassle. (Hug those special unicorn project-bringers tight and serve them well, because you want them to hang out with you more often.)

Putting the proposal together

Don’t worry about putting your fancy pants on. You can start building your proposal with something as simple as Google Docs. Google Docs is a great place to start building your proposal document for several reasons:

  • It’s free
  • It’s shareable
  • There are lots of options for formatting and customizing
  • It offers the ability to comment (handy if you’re collaborating with someone else or if the client needs to ask questions of you)
  • You can edit on the fly from any device you’d like

There are a bunch of free proposal templates online, so you don’t have to reinvent the wheel. I suggest taking a look at a few for inspiration, then borrowing the elements relevant to your business approach.

After you’ve written your first proposal, you can use the bones (headers, formatting, etc.) as a template for other freelance projects. Just make a copy, edit out any job-specific details, and then make another copy of the stripped document. That second, clean copy with prompts like [CLIENT NAME HERE] is crucial since every change you make is viewable by anyone you’ve shared the doc with.

You run the risk of embarrassment if previous details are hanging around in the document history. It bums a client out to see the name of another business in the body of their proposal. On some level, it affects their level of confidence in you and what you do, even if they never communicate that. Attention to detail matters!

The way you word things is important

When you’re writing a proposal, think back on client interactions. You always want to be professional, but it helps to adopt the overall tone that they use when talking with you. If they lean toward a more businesslike approach, keep things a little crisper. If they’re a bit looser with you, you can use that approach instead.

No matter what the tone is, you want to keep things straightforward and clear. It’s best to cut to the chase and not pad the word count. Skip the use of jargon and industry-specific acronyms. Aim for warmth and clarity.

What you should include

Your basic freelance project proposal needs a handful of things:

Cover page

The cover page needs the client’s company name, the project title, and the date you’re delivering the proposal front and center. Including your logo or a project-specific graphic above that information is an excellent touch, too. Then you’ll specify who the proposal is prepared for (your project contact) and who prepared it. Include an email address or phone number for each.

Project Summary/Opening Statement

Even though this section comes first, you should write it last. The rest of the proposal gets summed up here, and it’ll be easier to do that with the other parts in place. You want this opening statement to be a little attention-getting. It’s also a great place to thank your client for the opportunity to work with them.

Needs/Challenges

What’s the client having problems with? What needs addressing and why? You might want to include how long it’s been an issue, too..

Goals/Objectives

This section is where you state how you’re going to solve the problems or meet the needs outlined previously. I can’t stress enough that you should be clear about how this will benefit your client. They don’t just need to hear what you’re going to do for them. Hit ‘em straight in the feels by helping them envision how great your solution is for them.

Cost/Payment schedule

Layout your quote here. Then note any conditions for payment, like what kind of deposit is needed before you start the work and any periodic payments you expect along the way.

Process/Timeline

Communicate how you work and when you’ll complete the project. What will you deliver and when?

Credibility/Brag

Social proof is important, especially for a first-time client! Use this section to outline your qualifications for the project at hand. Feel free to list (or link to) any related accomplishments, and be sure to include relevant work samples. Offer to give testimonials from previous clients and answer any questions.

Terms and Conditions

How many tweaks and revisions will you make? How can the final product be used? Are you transferring copyright? The contract restates these in greater detail, but include any significant details along these lines in your terms.

Next steps

Don’t let a client run the clock on you. Tell them exactly what they need to do and when they need to do it to move forward on the project. It should be understood that if the proposal is not signed and sent back before the deadline, it’s open to revision.

Signature line

Create a signature line for each of the parties listed on the cover sheet. Make sure to sign and date the proposal before sending it over.

I know it feels like a lot now, but getting that first proposal under your belt will beef up your confidence. You’ll be a pro at this before you know it.

More Freelancing Fundamentals to come

This post is part of a series called Freelancing Fundamentals: How to Take a Project from Cradle to Launch.

We have a few more subjects to tackle in this series, but I’ve also been exploring these topics with all kinds of digital entrepreneurs and innovators on the OfficeHours podcast. Check out my recent discussion with Justin Sainton for more on project proposals and pricing.

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