The FileMaker® Developer Conference (FileMaker DevCon) for 2019 was August 5-8 in Orlando, Florida and I had the pleasure of presenting on one of my favorite topics, talking about money with your clients! I tackled the full range of money topics, including why is it so scary to talk money, how to better negotiate, how to create a ballpark estimate, and how to make sure you get paid!

Please find a full transcript below: 

Susan: Hi everyone, welcome to talking with your clients about money or Talking Money with Your Clients. I’m going to tell you right now, that this title disappeared right before I started this so I don’t remember. I’m pretty sure that’s correct. Regardless, we’re talking about money today. I’m Susan Fennema. I’m the Chaos Eradicating Officer that’s CEO for Beyond the Chaos. I do project management and operations consulting. I have a lot of consulting clients in the FileMaker world. I’ve been in the FileMaker world since 2010. Power-user before that back as early as the old Claris days.

So I’ve been around FileMaker for a long time. I have 30 plus years of project management and operations experience across many different industries. So I bring that in the form of where we’re going to go with talking money and how it affects your project management that will be tied into today’s conversation. I am non-technical, even though I love FileMaker and I love technology, I am specifically not technical and I try not to get into the weeds of the technology. I find it helps to be able to see things from a higher perspective or different detail perspective if you’re not trying to solve the client’s problem because you know how to.

So I’ve consciously chosen to not get into the weeds there. I’m also non-certified. I don’t want big charts and big pretty reports. I want the project to run. So also purposely not certified. I do love technology, though.  I am a paperless household. But I have to get the new iPhone every time it comes out. So I love that. I am a small business fan. I have been surrounded by small business owners my whole life. I’m the daughter, best friend, and sister of small business owners, all in very different industries.

I understand the challenges, and I understand the challenges of doing it whether you are on your own or whether you are in a team. So I hope to bring that too. I’m also the Lead Facilitator for WITfm so if you have any questions about women in FileMaker, please speak to me about those as well.

I also am the godmother and aunt of two adorable little kiddos, a brand new baby boy and Katie. It’s Jake and Katie there and I’m a home chef. And I put all my project management skills to the test when I cook at home too. I love multi-course dinners with paired wines and setting formal dining tables. And I know a lot of that’s kind of gone by the wayside. But to me, I think that that is such a great way to give love back to the people that you want in your life.

So what will you learn? That’s me. What will you learn? Why are you here? Why should you be here? First, how to build a proposal – that’s going to be part of this. That is an essential step to success with a sale as well as setting that money expectation and make it part of project management. You will also learn to ask for what you’re worth. So not to make apologies, not to give things away, not to give discounts. How you ask for what you’re worth. How to manage changes, that’s where we all get bogged down.

You have a plan and then everybody starts asking for stuff. And then how does the money play into that? Also how to draw the line and say no. And how to say no, by saying yes. I going to give you some ways to do that positively. And then lastly, how to have natural and non-emotional conversations about money. I think a lot of us have a lot of emotions tied to money.

So let’s also talk too about how this applies. I’d love to know in the room, how many consider yourself a freelance subcontractor? Raise your hands. It’s a lot. Okay, how many are internal developers? We just have one, okay. This applies to you too. You have to pitch this to your whole team to get funding and all of that. So that’s how this is going to apply in your world. And then how many of you consider yourself a business owner? How many business owners with your hands in the air all also said you were a subcontractor? Okay, I like that.

So part of this managing, you can put your hands down now, part of this managing money is thinking about yourself as a business owner, not as a freelancer. As you’re thinking about your business, you might be a subcontractor, you might be a freelancer but think about it from I’m a business owner standpoint. That’s where we’re coming from there and it doesn’t surprise me that about half of you were identified as both.

Okay, next question. Who bills by the hour? That’s a lot of you. Who does a fixed price? Okay, also, and I bet some of you do both. And then does anyone in here do value pricing? Oh, we got a few. Okay, I’m not here to train you on how to price or to teach you the right method to price. This applies to all of those methods. What we’re talking about this money is more philosophical. It doesn’t matter how you bill. There are ways to accommodate all of those methods into the general conversation about talking about money. All right. So, we talked about how that applies to all of you. Let’s jump in then to why is it scary?

Yesterday, I had to get up in front of a room full of women who have been women who lunch for 25 years and tell them that we have to start charging membership dues. I’m not going to lie I was a little nervous about that. And I knew though, what they were going to get for it, and I knew why we needed to do it. And so there had to be some confidence when I came with that, but there was some emotion, there was a little fear for me doing that. So we all have some fear around money. Even if you feel confident, even if you’re acting that way.

There is fear around it. The first way that comes up is our upbringing. Mom says, “Don’t ask them how much they make? That’s so rude.” It starts that way. Or don’t be jealous of what other people have. There’s a lot of lessons that you learn as a kid about money that makes talking about it scary.

The other thing is not setting clear expectations with the people that you’re talking with. If the money just gets spent, nobody knows how it’s getting spent. It’s a little scary, then at the end, you’re kind of surprising the client after the fact, when you come with something that you’ve already done. That we’ll get into a little deeper of how to avoid that in the future. How many of you have experienced this? Send an invoice and duck. Just hope that they pay it and hope that they don’t yell at you, hope that there are not all these arguments. Some of these concepts will help you get rid of that fear.

Another is budget concerns with your clients. “Oh, they’re so small or they’re a non-profit, they might not have the money. I want to be fair, I want to make sure that they’re taken care of.” Don’t assume they don’t have money. Non-profits have money. Don’t assume that they don’t. That’s the first thing. If there is a budget concerned there are some ways to address it and we’ll talk about those too. It could not be true if they tell you that too. I have a limited budget. Do you really? It’s always something to wonder about. Are you also presenting what the value is of what they’re going to get out of it? They might have more money if they get that value.

So the other is, all of this is scary. But you what’s scarier? Talking about it when it’s heated. So these are all ways you’re avoiding talking about it. And if you keep avoiding, you get to the end and it all blows up and now it’s terrifying. And now you’re eating money. So avoiding the conversation does not make it go away. What else? I’m interested, and you all can shout it out. I’ll repeat it. What else makes you afraid of talking about money? Losing business. There’s a good one, but if you’re not getting paid for the business or you act doesn’t matter. So that’s a great one though, what if a client gets mad and leaves?

So other fears are surrounding that. But I will say what mainly causes it, is not believing in your value. You don’t believe what you create is worth money to someone. And that’s not true. Just because you think it’s easy to do, doesn’t mean anyone else can do it. It doesn’t mean the client can do it, certainly doesn’t mean they can put it together like you would put it together. Some might even be able to do it but don’t have time to do it. So you still bring that value to get it accomplished.

So never underestimate what you provide, what you create, and what you can do that they cannot. That is an internal value that only you can give and all of us have a different value that we can bring. So even if two of you were competing for the same piece of business, you would do it differently. You would present yourself differently, and your value is different. So, do some introspection and come to have that confidence about what you present. There’s your confidence right there.

All right, so let’s talk about perceptions of money. It can be energizing. If you have money and you’re selling projects and you’re getting money in. It gives you the freedom to do other things and that energizes you. You might be more willing to say no, you might say let’s take a vacation. So money can be very energizing. Some people think of it as a game. “Oh, wonder if I can get more if I do it this way?” Or “Oh, I hope I win. Right? I hope I win that proposal.” So there’s a game about it. There are also goals. Some people I want money so that one day I can retire and live in a cabin in the woods. So there are goals surrounding money.

And then there’s also this perception that too much money is bad. So if I make too much, that’s not fair, That’s not right. So let’s unfold that a little bit. I don’t think too much is bad, because it gives you the ability. If you don’t make it, you end up not being able to employ people. So other people can’t have their families cared for. It gives you a lack of ability to I’m sorry, I can’t even read this my eyes are so old. You aren’t there. That’s a big one. You aren’t there the next time your client needs you. You’ve gone out of business because you didn’t charge enough. Or you didn’t collect your money. So you didn’t get paid. If you’re not there that does them no good. So having money prevents that.

And then the last one, you can’t give it away if you don’t have it. So you can’t donate to your causes. You can’t support other people if you don’t have money to give away. So I would challenge you if you have that concept of making too much is bad. Maybe readjust that to … we’re not gouging people here. That’s also bad, but how can that money be used for good and that might help with some of that perspective. So we’ve talked a little bit about the philosophy of money, the background of money. I now want to work into, we’ve got that client on the hook. They’ve called, they’re ready. They want to do something and before you even get started, “Can I have a ballpark price?” “What ballpark are you even in?” You don’t know that yet. So there are some ways around this question.

The first thing that you can do is give a ridiculous range. “Oh, yeah, I’ve done projects from $2500 to $125000.” Two things will happen from this. First, the client is going to hear the lowest number no matter what you threw out, no matter what it’s about, they hear that lowest number and that’s what they think it costs before you know anything about it. But the other thing that might happen is you’ll get some answers on what they had in mind for their budget. Like, “Oh, I was thinking you know, closer to the 2500 range.” Okay, well, now you know how to start framing the conversation a little bit better.

And the other question you might get, what’s your hourly rate? Everybody probably has one. But who cares? It depends on how long it takes you. If you don’t know the scope of the project, and you haven’t talked about the details of the project, your hourly rate is irrelevant. You could do it three times faster than the next guy that charges twice as much. So, that hourly rate is irrelevant until you know how many hours are involved.

The other is that comparing rates without the speed, that’s a big one, right? How many of you feel like your rate is right on target with how fast you work? That is not very many of you. So really, think about that. Would you give an hourly rate is a question? I would not. Unless you qualify it, you could say, well, my hourly rate is usually this but I have 30 years of experience of doing FileMaker development and keep that in mind when you’re getting quotes. If somebody is just randomly calling around asking for hourly rates, they’re probably just looking for the lowest deal and I’d pass, not my client, right.

Okay, so guesstimates right? They’ll also ask for guesstimate so even if you’ve started talking, you’re out of the ballpark range, maybe because you’ve now started a conversation but now before they even get off the first call with you, they’re like, “Hey, can you give me a guesstimate?” You’re like, “I haven’t even absorbed this information yet.” So, first, I would not do the guesstimate initially unless you wanted to take that same approach to the ballpark with a huge range. That’s a way to get that in there.

Instead, schedule another meeting with them while you’re on the phone. “I need to absorb what you’ve told me, I need to think about it. I need to figure out how we’re going to implement it. But I’d like to regroup with you in a week. And then I can give you that can we meet on Friday at 2 pm.” Be specific, get it on the calendar before you get off the phone. Now you also have set yourself a deadline to do it. So they are comfortable because they know when they’ll have an answer. You have a little pressure because you know you have a deadline.

So once you learn more about the project and the client then you can think about the price. So pricing the client and the work is important. If you’ve done a little research and all of a sudden you find out, “Oh, I’m their sixth FileMaker developer and they keep firing people. Is it them? Is it the other developers?” That’s a red flag. To start, maybe you’re willing to take that risk. But maybe your rate or your fixed price is higher for this client because of the risk you’re taking. If it’s a more complex project, if you just have some light scripting and layout work to do, maybe you have a different price than if they want you to start integrating with APIs and the Internet of Things and all of those other things.

Those should command a higher price. So think about the work and the client when you’re putting that price together.

And then what about discovery? How many of you charge for discovery? That’s a lot. That’s great. Discovery is the work that you do before to figure out what you need to do. So discovery is absolutely something that you should be billing for. Some people do flat rate discovery, they might say, “Hey, listen, I want to get involved with you $1500 we’ll start discovery.” The client gets something out of the discovery process, even if they end up not doing the project. And that sometimes is worth your discovery fee for them to discover that they don’t need to do the project. All of the questions that you ask them as you go through discovery are making them better.

So the bill for discovery, charge for it. Even if that’s your kickoff proposal, the short discovery proposal, make sure you include it. Some people will even do a $1500 discovery and then we will credit that towards the work if we do the work together. So there are ways to do that, I still think is valuable in and of itself without the credit.

Okay, so we’ve had our first call, we’ve got our second call, we’re ready now to move to the proposal stage. Project Management starts with your proposal. It’s a big important thing to note. If you don’t have your act together in this proposal, your project in three months is going to go off the rails. So let’s think about what that means for a proposal. Your proposal sets the tone with the client, how are you communicating with them? Are you telling it like it is? This is it, here’s the price we’re done.

Are you giving them three options and letting them choose the price? This is your method of communication. This is branding, if you will, of how you’re going to interact with them. So think about that. It’s setting the tone. It is the first step towards a successful project and so you want to include the basics. What are the basics? Scope, price, and timing. Those are the three basics to get to a good project.

So we’ve got it, they’ve got it, we’ve got it ready to go. It’s time to start writing. We know what goes in, it’s time to start writing. First, what goes into a proposal, not more than three pages. If it’s more than three pages, your client is not reading it. Do not include a bunch of tech specs. They don’t understand it. And they don’t read it and if you try to hold them accountable to those tech specs later, it’s going to blow up in your face. Because they didn’t understand what that was in the first place. Instead, define the scope by what the client is getting, as opposed to what you’re doing.

The clients getting an invoice with a place to put a PO and a return shipping label that prints out with it. Tell them what they’re getting instead of how many scripts you’re writing and how many fields you’re adding and how many layouts there might be.

I’m a firm believer in providing three options. One of the things that you create when you provide three options is studies have shown that three options convert people from thinking, do I work with you to how do I work with you? The other things of those three options are you can come with a high price as your highest level option, shooting the moon with everything that you think you could provide, bells and whistles and guess what, sometimes you’ll get it. You can also then come with the middle one, that is probably what they’re going to go for, 95% of the time, and then a budget option. So the budget option might be slower, it might be faster depending on what your availability is and I will tell you we all know the work fills the time.

So maybe faster is your lower price. But there are ways then to create those three options and this is another creative skill you can practice. All of you are creative in your coding developing these options can be kind of fun and creative of how it’s going to work.

Always make sure that you’re designating a deadline or a timeframe. And I know all of you are going to say right now, but we don’t know when they’re going to sign it. You can set an expiration date on your proposals. And then you can build a timeline according to that, or a timeframe. It can be completed within six weeks of received payment, or however, that might be. Remember, when you’re setting your timeline that duration and estimated hours are not the same things. If you say in a client proposal, I estimate 80 hours do you know what they’ve heard? I can have it in two weeks. So be careful with that one.

Client testing can always follow. So if you’re worried about well, I don’t know how long it’s going to take them to respond or test it to provide a timeframe. Tell them the deadline for their receipt is when their testing begins. So that way you can control it, it is much more in your control. If it is a fixed price, your scope definition is a lot more important. You want to be a lot more clear. Estimated hours though, your client still hears that as a [card 00:25:24] number budget. So even if you’ve estimated hours, you’re going to need to manage and control that as you move through.

Hey, so here comes to the money part. Make sure you explain the budget in detail. As we were saying the estimated number of hours, is it estimated or are you giving them a fixed price? Or what are they hearing? Are they hearing your estimated hours as a fixed price? Are you giving them a budget or are you saying this is your price? Most clients are going to be much more comfortable if they know what something costs before they pay for it or before they undertake it. So keep that in mind, anything you can do to firm that up or to communicate that better is very valuable at that stage. This is part of writing it. So how are you writing that?

Designate your payment terms, how do you want to be paid? I will tell you what I hate when someone mails me a check and I have to get in the car and drive to the post office to pick up the check put it in my bank. I have a link on the invoice to let you do that. But some people have to write checks. Some people are uncomfortable with making payments online.

Some people think you then have their information even though I have more of it on the check. And so give them options and I say all my proposals get a 3% discount if you pay by the link in my invoice. I’ll take credit cards, I’ll take all this. So basically I’ve priced the whole thing, and then I’ve marked it up 3%. And if they pay me the way I prefer to be paid, they feel like they’re getting a bargain. I get paid the way I want and anybody else pays me more.

So that is the way to consider that, be careful about calling it a handling fee or a mark up for credit cards. Different states have different laws about that so you don’t want to get in trouble with that. But you can always give a discount for a preferred payment method.

So payment terms are another thing. So how many of you enter into a project without having any money from your client? We have a few. They need to have skin in the game, they need to commit to you. Minimally a deposit minimally. This is going to avoid you. One, are they going to pay you at all? I’ve had the contract signed and they’ve been the checks in the mail. Never hear from them again. So be careful with how much work you’re going to do before you get paid? That’s the next question. Are you going to finish it before you get paid at all? How many hours is that? These types of terms are important to think about. I believe everybody should have skin in the game.

The other is I ask for all of it upfront, in my proposals. I do fixed price and I ask for all of it. And I almost always get it. I am a person that’s driven then by that if I get somebody that has paid me all the money upfront, I internally, sorry, personally feel very obligated to deliver to them because I already have their money. Other people feel like “Yes, I won a sale, what’s next?” And don’t care about the work. So know yourself in that too. If you need to stage payments to keep you motivated to do the work, then do it that way.

But if you can get it all up front, that avoids having to talk about money the rest of the time, do the work, invest in the work and work together to create something instead of constantly bickering about whether this is another half hour, or should we add this because we don’t, those things will still come up a little bit but it makes all of it a lot easier. And then every two weeks you don’t have to send an invoice and argue about every line item on the invoice.

So think about getting that upfront to get the money out of the way up front. And you can do many methods. You could do a bank of hours another way to do it, and you pay for 20 hours in advance when the bank is almost over, you re-invoice them. It’s a good place for you to be able to stop too if they stop paying you.

Don’t lose your leverage. I think you should not tie your payments to milestones. The worst is when we’re finished. Okay, well now you’ve just let the client define when you’re finished. If you’re going to stage payments, do it time-based maybe, the half now, half in 30 days, payments every two weeks. The bank of hours is a way around this too. There is an exception to the milestones. If you are really, really, really good at project management and client service then you could consider it, but I still don’t like it. But if David Knight were in here, he would argue with me. So, that is a David Knight, he likes that method. But they are very good at those things. So you have to be good at it.

So let’s talk about how we have it written, we have our terms. We now need a process to push this out. So first, get a trusted advisor to review your proposals. It could be a spouse, it could be a team member. It could be a colleague, maybe the two of you team up and read each other’s. So you’re sharing that information. If you’re in a mastermind group, mastermind group members sometimes will do this. But get somebody else’s eyes on it. Do they understand it? Do they feel like you’re pricing yourself, right? Somebody else is always probably going to tell you to price yourself hire. So always something to consider when you get that input from someone else.

Do not just send the proposal out to the client, and hope they get it. Walk them through it. This is an opportunity to learn more about them. And you don’t present it. It’s not a here is a slide and here are the things, it’s a conversation. Interact with them, learn what they feel and think about the scope items, find out if you’ve hit their target of what they expected. Ask them point-blank. So be willing to modify if you hear client feedback that “Oh, yeah, that did not. I don’t need that.” Be willing to modify your proposal after you’ve walked through it with them to accommodate any feedback you’ve gotten from them.

Don’t email it and pray. That’s the worst. Just make sure that you’re talking through them. And I will tell you even to the point where if they ask you for it before your meeting say no, I’ll send it to you after we meet. And you can do this if you’re local and you want to get together and do it in person, that’s great. Most of us I think, work with people that live further away. So screen shares are a way to do that. If you are comfortable being on video having your face in the video while you’re doing it so that they can see you. This also starts your client relationship. This is your first ability to partner with them at this point.

When you get to the pricing part, share it without hesitation. No apologies. You’re not sorry about your price. Is Target sorry for how much they charge for bottled water? You’re not sorry about your price. Don’t be sorry, don’t apologize. Don’t make excuses. “Well, it would be lower. But I had to do this.” No. The price you’re proud of it, this is what your value is that you’re offering, stand behind it and present it confidently. Don’t be wishy-washy.

So moving on in this proposal process, we’ve now presented it or walked through it not presented walkthrough. We have now sent it to our client in some form for them to sign it. And make sure that you have some systematic follow-ups. First one, make sure they got it. I once lost a project because my client didn’t get my proposal and when I followed up after the thing expired, they’re like we’re still waiting for you to send it. We went with someone else. They had it, but it was in their spam and I didn’t follow up the next day to make sure they had it. That’s never happened again.

If you’re using something like an Adobe Sign or a HelloSign for digital signature, I highly recommend that it will tell you if they’ve seen it. It will show you in the solution they’ve seen it. So think about that. Check-in with them with questions about halfway into your to your expiration date. So set a reminder for yourself in your project management tool or in your CRM, to follow up with them halfway through, “Hey, you have any questions? Anything I can help you with? Any concerns?

You can do this via email or a voicemail even if you can’t get them on the phone. And this allows reminding them that they still have a proposal that they haven’t signed. Then as you get closer to the expiration date, remind them of the expiration date as well. “Hey, this is going to expire tomorrow. I just wanted to let you know.” If you don’t hear from them after the expiration date, then you can tell them, “Hey, listen, the proposal is expired. I’d still like to work with you. So if you’d like to revisit this, I’m happy to talk to you about it again.” So there’s your sales process right there. Follow that and make sure that you’re not just again, praying that you hear back from them one day.

So what happens if you get into a negotiation situation? Negotiation is okay. There’s nothing wrong with negotiating as long as it’s an actual negotiation, not you just giving in. So, if your project is accepted immediately, every time I want you to consider are you valuing your services appropriately. You might think about increasing your prices a little bit, they should think about it a little bit, because they are investing. So think about that if it’s accepted immediately. That’s a question. We all like that a little bit but then maybe next time we’ll a little more. Negotiation is okay but it does set a precedent.

So you want to make sure that if you have … everyone has had a budget shopper at a flea market. This is not who you want to work with when you’re selling professional services. If that’s the negotiation you’re getting into right away, then you can stick to it don’t back down and they either buy it or they don’t. But if you’re getting into something that like I mentioned, you had gone through something and the client is like, “I don’t need that, or I don’t want that or I don’t need that yet.” Now you can negotiate some of those things out because you can remove value from the scope that you had proposed and therefore reduce your price.

But you don’t just reduce your price without removing the value, you have to do both. And if the client also comes and says, “Look, I don’t know what to do, I can’t get this done, I need more, I need this much more.” Great, I’m happy to revise that and negotiate that with you, it will be this much more money. And you want to make sure that those two things combined to work together.

Timing changes is another thing that is a negotiation thing. And remember, the work will fill the time. So doing something slower, might not make more money. So that might not be something that you want to reduce your price for. Doing something faster might be too hard on your current schedule. So if you’re going to negotiate timing, don’t only take into consideration the effect on the client deliverable, oh they get it faster, so it’s worth more to them. That might be true.

Consider how it is going to affect you in your business. And then also, are you going to be able to deliver it? So if you’re going to negotiate that timing, be very aware of all of the factors that go into it.

Payment terms and changes to those. I’m going to tell you what you want to know about my favorite negotiation. “Hey, listen, we want to buy your top option, but we can’t pay 100% upfront, would you consider 50/50?” “Yes, I will. Yes, I will. I’m happy to take that negotiation over and over. Let’s move on and get to work.” If you’re to the point that that’s the thing you’re negotiating over you’re in a good spot with your client and that’s worth giving a little bit but if you don’t ask for it all upfront, you don’t even have that area to negotiate in.

Okay, so getting paid, here’s the fun part, right? We took all this work. If you don’t get paid, stop working. Stop working if you don’t get paid. A lot of us suffer from this. The reason we do this work is that we enjoy it. We enjoy solving people’s problems, we enjoy making their lives better, but we also enjoy having food on the table and paying our employees and somebody else shouldn’t lose out because they are paying you while you focus on this client that does not remember that every time you say yes to something you’re saying no to something else. So if you have a tough client that is not paying you, maybe you need to consider switching out to one who is. That’s also very stressful for the relationship.

If you are a subcontractor do not finance someone’s business. Subcontractors waiting on clients, your client’s client to get paid, where the client might have a no sense of urgency to go get the money because what do they care? They don’t have any money out. Also, they haven’t invested anything. Plus, they hired you to do it. You did all the work their client hasn’t paid them. Well, when they pay I’ll pay you. If you’re going to enter into that and there are some situations where it is valuable to enter into that relationship with the subcontractor.

Make sure that you are clear upfront that, that’s what’s happening and not surprised later when they tell you that. If you are in that situation to I recommend that there be a cutoff. That’s fine. We can wait until the client pays you as long as it’s within one month of the invoice or something like that. So keep those things in mind if you’re subcontracting.

The other is if you are not invoicing you cannot get paid. So how many people here hate invoicing? It’s a lot. It’s not everybody’s favorite thing. But if you do it, you’re more likely to get paid. You have to send the invoice. To develop your system. On Mondays, I look at my bank of hours and I refresh them. If I do a fixed price that builds out over a certain number, I have a flag that reminds me to send that invoice on the day we agreed on. So set that up and make it a process.

Once you get the proposal, now you have your client, you’ve won, you’ve gotten paid. Yay. Now we’re going to start managing our budget. How do you do that early and often talk about money all the time? Starting a new project, you have a full bank, we’re ready to go.

Mention it at every status meeting, and it’s not an emotional conversation. It is about, here’s our bank, this is what we’ve done against the bank. This is where we are against your budget. If you say it early, when it’s positive, and there are no issues, you bank with them for when there is. So if you’re and it’s also so much easier. Oh my goodness, it’s so much easier if you’ve already talked about it. If you have a conversation with somebody when something is good, it’s a lot easier to have a conversation with somebody when something is bad. So also that practice is good.

Changes. We all have them, every client asked for them. They’re not free. They’re not free at all. And everyone knows this. Most clients are not. They are fine if you said that’s a change, it’s not what we talked about, it’s going to cost more. But what we don’t do is we’re not saying that. The client is saying, “Can I have this?” You’re like, “Oh, yeah, I can do that. I can do that. I can do that.” And you’re checking all those things off the list. And nobody came back and said, “I can do that, but it’s $500 more and it’s going to take an extra week.” And if you said that, then you’re good. But if you don’t, now you’re spending their money. So here are some ways that you can manage that.

One is to have a contingency budget, this could be part of your proposal and say, “It could run up to 10% over as a contingency.” If you buy a house, this is what you do, right you have a little contingency. Change bucket kind of works the same way, this might be a certain amount of money that they put aside upfront. So this works well too with clients that have to have budget approval from somebody else. If you can start with a bank of $5000 or whatever you decide of, “Hey if you have a change, we can pull it from this bank.” And that money is already paid to you upfront. That is a great way to manage these types of changes that come up.

Another is your free. I’m going to call it free because we’ve already priced it at the beginning. It can be called free to your clients, but that free bug fix window. So after I deliver it, if you find any bugs in the first 30 days, I will fix them for you for free. What you’ve also said by doing that is I’m not fixing them for free after 30 days. It also encourages your client to test during that window, make sure you remind them when you get there. So that they’re not surprised that 30 days are up when they didn’t even know that really, they were supposed to have this window because they’re going to forget when you get there.

The other way you can manage changes is a wish list. So on a wish list, you can put all the things that they asked for. So, “Hey, yeah, let’s do that. But let’s get this product out fast. Let’s get this that we’ve already decided on there.” It’s amazing when you come back to those at the end, how some people don’t even remember what they asked for. So it wasn’t a valuable request in the first place. Some people call this parking lot, someday maybe those types of lists so call it what you will, but that’s what you’re designating there.

The other is to manage expectations with this. So the big one is clear, concise communication with consequences to your client. So if they say, “Oh, can you do this?” You’re like, “We absolutely can do this. We’re FileMaker developers. We can do anything for time and money.” It’s just time and money. So make sure that you’re telling them what they’re asking for what the consequence of their request is because they don’t know. They don’t know if they’re asking you to change a field label or create a whole new module.

So make sure you’re telling them what the consequences are of their ask. And make sure you’re getting approval from the right person to spend the money. If you’re working with an operational leader, and they’re not talking to the financial lead, and it’s not the same person, you might have some issues that come up. So make sure you’re having that communication with the right person.

A lot of this comes because we have to say no. I don’t like to say no, anybody likes to say no? That’s what I thought. But we want to say there are ways we can say yes. So, yes, we can take care of that for you. But you know what, let’s wait, let’s put it on that parking lot or that wish list. And let’s come back to it after we create the project that we spent a month defining. And you just had this brilliant idea, just the second and I’m supposed to add it in without thinking about it. Let’s just wait. Let’s see if you still need it. Because we already scoped all this out.

And the other is to say yes, but with the consequences like we talked about. So, “Yes, I can do that. But if there is going to be a change, it can come out of your contingency bucket or your change bucket. It will cost an extra $1500 and your timeline is going to be extended by an extra three weeks.” So make sure that that’s still a way to say yes, but what you’re doing through all of that is you’re giving the client the control over the budget.

They are deciding to spend their money. You should never spend your client’s money before you ask for it. That’s theft. So, with that, if you do all these things here your results, happy clients. Your clients will be happy, they knew what it was going to cost. There will be lessons learned, along the way you will figure out some things, your process might change. Take those lessons to heart and apply them the next time you do it.

Here’s another big one, your projects will be finished. You’ll complete them instead of them going on for years because they keep asking for things. And then lastly to the value is delivered, you are the professional, it is your responsibility to deliver something to the client that’s paying you instead of it’s been a year and a half, and I’ve spent 75 grand, and I don’t have anything. So make sure that they have the tool that was the value they needed in the first place.

Very lastly, guess what else you get? You get to profit because that’s why we’re in business is to earn a profit, most of us at least.

Q & A from Audience

So, with that, I’ll take any questions you might have. I do have a microphone up here. They are recording this so if you have questions, come on up, and I’ll let you chat on the mic. Come on up.

Speaker 1: Thank you, Susan. I appreciate your point about changes isn’t free. In my experience, however, the clients always say, “Well, that’s what I meant. That was included in what I specified in that scope.” How do you handle it?

Susan: That’s a great question. Hey, can you hand it to him? When you scope things, you know what you are scoping. So, if that is not how you understood it, and that is not how you scoped it, there has been a miscommunication. But the price you set, an estimate you set was based on your understanding. That is the way you can go back and talk to your client about that and say, “I understand that’s what you thought you asked, that is not what I heard, that is not the price I put on this.”

Maybe you meet in the middle, this might be a negotiation time, where you meet in the middle with them and say, “This would cost this much but I understand that we had a miscommunication. I would only charge you this much in this instance.” That is an opportunity to have that reset conversation with your client. But you should have it not just given and do it. Does that answer? Okay, great.

Speaker 2: If you’re asking for the full price upfront, but the project then varies considerably. How do you deal with that? Or is that sort of fixed price, fixed scope upfront?

Susan: It’s more if you’re asking for a fixed price fixed scope, you can ask for all of it upfront. But you can also do it the same way. If you’ve managed it. If the project changes, then that’s change.

Susan: You can go back and ask for more or it can come out of the change bucket or it can be part of a contingency that they’ve already pre-approved. Does that make sense?

Speaker 2: Thank you.

Susan: Okay, sure.

Jonn: Hi, Susan.

Susan: Hi, Jonn.

Jonn: So let’s say you have a project with a customer you really love and yet the project original scope just keeps changing and by the nature of the project, it’s been really hard to manage scope. They paid regularly. They love the work, they love working with you, but you keep getting so far down the project that it’s been hard to determine the final scope of it. And they run out of money at a certain point. Then they’re afraid to tell you because they like you. And they want you to finish the project. But the checks stop coming. Even after you’ve stopped development. What do you do?

Susan: Well stop working, did I say that? Stop working if you don’t get paid. Okay, so that’s one. You are going to have to reset that relationship with the client, for sure. The fact that you already let the scope get away from you it requires a conversation to reset. And until that client is paid up, you cannot do any more work. And unless at that point, if your client has stopped paying, I would start to pre-bank hours so that you don’t run into that long term issue.

Jonn: Informally setting and in a conversation with all their parties involved on the client end, right?

Susan: Yes, all the client, all the parties involved, and I would write it up, the change like a new proposal.

Jonn: Sorry, it might be a good opportunity to completely reset the way that as a team, both the client and the developer, manage the project moving forward. So now you understand each other a lot better now have a meeting about an entirely new way of managing it, right?

Susan: Right. We’re not going to get into this situation again.

Jonn: You want to prevent that.

Susan: Maybe it’s smaller sprints, and you’re delivering smaller amounts of work before something changes. So there are ways to manipulate that-

Jonn: And to keep the rapport because what I’ve observed and this is not the first time right, is that when it gets to a point where the money is tight and the end of the project becomes not completely clear. Sometimes there can develop feelings that break the wonderful rapport you have and that’s the last thing you all lose, right?

Susan: Absolutely. If ever you do have, this is a good question. If you ever do have that feeling of confrontation with your client over a money situation, a scope, stop right away and have a reset. You have to have that reset and that’s going to be a hard conversation. And there will be emotion and fear surrounding it. But having that reset conversation to say, “Listen, we got off track. We did you did. Let’s regroup. Let’s start over. We’ll start obviously where we are. But let’s put a clear plan in place of how we’re going to finish.”

Jonn: I would think if you can succeed in that meeting in putting in a clear plan that might bring joy to both sides.

Susan: It should bring joy.

Jonn: Thank you.

Susan: Sure.

Speaker 3: Hello, great session.

Susan: Thank you.

Speaker 3: Thank you for that. How do you communicate, like a request from your client down to your developers? So what’s your process breaking down the request to Like, “You guys have to do this, this and this.” And after this, how do you make the billing and if you’re allowed to say it.

Susan: Okay, so that’s a whole session on project management. If you have a scope written in your proposal-

Speaker 3: Sorry, I’m talking about the change.

Susan: Oh, a change?

Speaker 3: For a change. Yeah. If a client says I want this and you have to communicate, analyze, make your time budget first and say okay, it costs that, how do you communicate all this between all the stakeholders?

Susan: Okay. Sure. Here’s an easy way to do it. If you’re using a project management tool, like a basecamp, teamwork where you’re capturing the emails through comments, you can email that information on entering in the request as a task, enter in as a comment on the task. Hi, this is a change. This is going to cost this much, this will extend your timeline by this long. We can say it nicer, am going fast here. Do you approve of this? And then make sure all of the stakeholders get copied on it and then the task does not move until it’s approved.

Speaker 3: So you keep all stakeholders in one channel so you can keep in sync everyone?

Susan: Only on that one comment. I would not put all the stakeholders on everything, they would probably fire you.

Speaker 3: Okay. Thank you.

Susan: Thank you.

Speaker 4: Hi, there.

Susan: Hi.

Speaker 4: Testing. Okay. How do you feel about the situation where you have a client who you have a good relationship with ongoing, doing work for very regularly, and it’s very rapid, agile development, lots of feedback, you’re at their office. So you bill them in blocks of hours ahead of time, like say this week, here are 20 hours of developmental hours, and that might be towards main project development or it might be split up towards bug fixes. But either way, it’s going to be about 20 hours per week. How do you feel about pre-paying like that time?

Susan: Absolutely for that.

Speaker 4: Okay, great.

Susan: That’s how we bill our project management hours at my team. We say we guesstimate that your team is going to need about five hours of work from us a week, we want you to pay two weeks in advance. So we’re giving you a block of 10 hours. I’ll check in with you again in two weeks we’ll see where we are. Yeah, that’s a great way to do it.

Speaker 3: Hi me again.

Susan: Okay, you’re back.

Speaker 3: Second question. If you pricing in a bug fixed period, do you cover bugs in either FileMaker, heaven forbid or particularly third-party things like APIs? We’ve been caught a couple of times where something is going on that’s beyond our control, but the client is expecting us to resolve it.

Susan: Well, if you have a problem there, right? Because you can’t fix that. But you might have to develop a workaround for them.

Speaker 3: Yeah, exactly.

Susan: And you can qualify that in your bug fix period and say, “Any of the software we develop.” If you want to put a little term and condition in there. And then if they ask for that change, and it is a FileMaker bug or an API bug, you can tell them, “This is not a development bug. This is a problem in the base solution. I can work a workaround for you, this is what it would cost to do that. Do you want to do it or do you want to wait until they fix it?”

Speaker 3: Yes, it’s a tough one. Are there any more questions? Because I’m going to tell a little story that I think people will be amazed at. This happened about 10 years ago, we had a client where we billed a solution and we had this kind of scenario. The thing was crashing, and we spent $30000 worth of time tracking down the problem. We ended up finding a bug in FileMaker server, going to the Wedge and demonstrating it. It was hard to show.

And once FileMaker saw it they fixed it. The client paid for that time. So we were very happy with it, obviously, although very frustrated that we had to put the client through that. But the final part of the story is that two or three years later, a new CEO came in threw out the FileMaker system, replaced it with a system that cost several times more. Even when you’re charging for those bug fixes you’re still delivering great value.

Susan: That’s true. That’s true. Thank you very much. So this session will have an update I have modified my slides since they got posted so that will be updated. And please remember to do your session evaluations. Thank you so much for coming. I appreciate it.

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