Have You Made This $45,000 Mistake?

As solo professionals, too many of us assume that we must quote every piece of business that comes our way, as long as it falls within our area of capabilities.

Why is that?

I mean ... who said we had to provide an estimate to anyone who asks? And who said we have to crank out quotes based on having only minimal information about the project or client?

I think many of us take cues from the wrong sources. We see other service businesses operating this way and we assume that's just the way it's done.

For instance, I recently had to replace the fence in my back yard. So I called two fence companies for estimates. Both of them came over to take measurements and give me a quote.

Interestingly, neither company asked me very much about the project before sending someone over.

Their salespeople just showed up. That's what they do. They quote projects all day long and rely on the Law of Averages to do its thing.

That may work for a fence company. Or for a kitchen remodeler. Or a software firm.

But not for a solo business.

I should know. Because not long ago, I made that mistake in a BIG way. I failed to ask the right questions during the quoting process for a large gig. And it cost me $45,000.

Here's the story ...

A $45,000 Mistake

Three years ago, a graphic-designer friend of mine called me with a potential web copywriting project for one of her clients. Before visiting the prospect, I took the time to qualify them, just to make sure that I was a good fit and that there was a budget in place.

Although the company was not exactly in my sweet spot, I was well suited for the work. Plus, I had a "champion" in the organization (my friend) who I believed would help me land the project - or so I hoped!

I met with the prospect a few days later to review the project scope. Everything went well. There were maybe a couple of dozen web pages to be rewritten and a dozen or so new pages that needed to be created.

Nothing huge, but certainly a good-sized project.

A couple of months went by. The prospect assured me that this was still a "go," but a few budgeting kinks had delayed the project. She'd be in touch as soon as they were ready to get going. (I've heard that before a million times, so I wasn't holding my breath.)

Two months later, she called. They were now ready to re-engage and wanted me to meet at their office to discuss the revised scope and provide a detailed proposal.

Once again, the meeting went very well. The project scope had changed considerably and had turned into a massive undertaking that including rewriting a huge corporate site, tons of SEO (search engine optimization) work, and lots of brochures and fact sheets.

I spent a couple of hours with the key decision maker, and we agreed on how to price and tackle the work. I provided her with good ideas and advice because I just assumed that I was basically her top choice. In fact, all the clues led me to believe that they had already decided to work with me - as long as my proposal was reasonable, of course.

I was salivating! A project of this size would not only be a lot of fun, it would also keep me busy for months. And it would add a very predictable revenue stream to my business (who wouldn't want that?!).

Two days later I sent in my proposal. It added up to a whopping $45,000!

Yes, it was a lot of money. But it was a very fair quote. And it would involve about eight months of work.

I followed up a couple of hours later, just to make sure that my proposal went through. I ended up in voicemail, which was no big deal. That happens all the time.

But then there was no word Monday. No word Tuesday. So I called on Wednesday and left another voicemail, followed by another email.

That evening, I received a voicemail from the client thanking me for my time and letting me know that they had gone with someone else who they felt was a better fit.

Wait a minute , I thought I was the only one they were considering?!

Obviously not.

Painful Lessons Learned

There are multiple lessons to be learned here, but here are the ones I want to emphasize.

#1: With new prospective clients, ALWAYS ask if they're considering other freelancers or firms. When you also explain the reason for asking the question (to make sure you understand how they're approaching the project), it will reveal a number of important clues.

For one, it tells you how the client operates. If they're talking to five other competing freelancers or firms, you can be sure they're shopping around. Depending on how you feel about that, this piece of information can save you a ton of time. It will allow you to walk away from what could end up being a fiercely competitive situation with no real winner at the end.

This question also will give you a glimpse into your prospective client's view of what needs to be accomplished. For instance, if they're going to compare you with a different type of service provider (one with a different skill set) or a full-service firm, this could be an opportunity to make sure they understand the differences. And depending on how they react to this explanation, you can then make a decision on how to proceed.

Unfortunately, I didn't ask this question. I assumed (incorrectly) that I was the only one they were considering. My friend didn't say anything, and I didn't ask. Bad move on my part.

#2: The bigger the project, the more reason to ask for the SIZE of their budget. I knew this company had a budget for this project. I had asked them this question during both my meetings. But I never asked them to reveal the SIZE of the budget.

Sure, that kind of question may seem a bit aggressive. In fact, I normally don't ask the prospect for their budget amount on standard, everyday projects. (Instead I quote a ballpark figure and ask if that fits within their planned budget.)

But when you're dealing with a project of this magnitude, it becomes much more important to know what you're working with. If asked with confidence, and if you explain why you need to know, it can unearth critical information.

If the client doesn't want to give you that information, or if you feel uncomfortable asking, give them a ballpark estimate early in the sales process. This will help reveal whether or not they can afford the level of service and quality you provide. It may even tell you whether or not you're approaching the project the right way, or if the client truly understands everything that's involved in getting the work done.

Here again, I didn't do either of these. I guess I didn't want to embarrass my friend (she was with me during both meetings). Or maybe I felt overly confident. Whatever the reason, I'm certain that this would have helped me address potential price concerns while I still had a chance.

#3: Always, always ask the prospect for feedback when you lose a deal. As painful as it may be, a "post mortem" assessment is a great learning tool. You'll discover what you did right and what you could have done differently - and you'll be better prepared the next time you come across a similar situation.

After several unreturned calls and emails to the decision maker, I tried my friend, who gave me some great feedback. It turns out that they decided to go with a full-service SEO firm who came in considerably lower.

She didn't reveal an actual number, but based on what she told me, I knew this firm had come in way too low. I figured either the quality of the content would be poor (these firms often hire junior or poorly trained copywriters) or the scope of work they quoted on was different. Or they simply made outlandish promises.

Or maybe all of the above!

This Week's Takeaway

I'm not proud of this big screw-up. But I know one thing: Considering the $45,000 price tag, I won't be making the same mistakes again.

My advice would be to incorporate the three takeaways above into your quoting and proposal process. One thing that has worked real well for me is to keep a list of questions handy. That way, when a prospect or client calls with an estimate request, I remember to ask all the key questions.

What about you? What helps you qualify your prospects better? What questions help you put together more accurate estimates and proposals?

  • Isabelle

    I would also add "#3.1: Don't beat yourself up about it." I can't avoid making mistakes but so long as I learn learn from them, I'm ok.

  • Anthony Sills

    Thanks for this reminder Ed!

    I typically don't ask why I didn't land the project so you're teaching me something new with that bit of advice.

    Any tips on how to ask in a way that gets actionable feedback [in other words gives me the specifics of what I did wrong] instead of just a vague "we went with someone else"?

    • edgandia

      Hi Anthony -- Don't try this via email. You have to get the client on the phone. That way you can keep asking follow-up questions until you get the feedback you really need.

  • There is another way to approach a large project like this and it is to take the focus off the budget and get the client committed to the relationship you'd be establishing.

    The best clients hire you because they want to work with you, not because you produce the lowest bid. My favorite (and most lucrative) clients never asked what I'd charge before they hired me (or simply asked for a rough idea of what I'd charge). We agreed on price after I was onboard. While not all budgets have been stellar, all have been very fair and made my work life enjoyable (which is the rationale for being a freelancer after all). And sometimes these negotiated bids have been higher than what I would have estimated on my own.

    When you do have to provide a bid, it helps to tie it to ROI, whether that return is monetary or in satisfaction. $45,000 may sound like a lot of money, but not if it generates several hundred thousand in revenues. Or, if it means a harmonious working relationship where objectives and deadlines are met and the client always has access to the person doing the actual work. If you felt that you and the client were a perfect match, perhaps it would have helped to present the bid with an agreement to negotiate price if the bid was out of the ballpark (maybe reducing your price a little but also having them cut back on the amount of pages produced in the first go-around).

    I think the ideal for all of us is to get to the point where we can say to a client, "If you want to work with me, let's sit down and work out a price that works for both of us."

    • Couldn't agree more with you, Lisa. That's actually how most of my client relationships are structured. That's one reason why most of my clients stay with me for 3+ years (one client is going on 7 years).

      This one, however, was a bit different. I didn't approach it like you suggested from the very beginning. I felt overconfident, and as a result, failed to ask the right questions and present my proposal in a different light.

      Thanks for your feedback and insights. You brought up some great points here!

    • @Lisa Stockwell, I believe that pricing should be based on ROI. But in practice, how do you determine the ROI of , say, a whitepaper?

      Ed, I would be curious to learn about your parameters (I will look for pricing based ideas here, in case you covered this specific point)

  • It was very honest of you to share this story!

    I suspect, based on my own experience, that they had called you in and strung out the negotiations for that long just to get your price quote. We have all been in bidding situations where there was a clearly preferred provider but due diligence stated that one or two more quotes had to be put into play. So you have to go through the pantomime of giving your presentation as if you are in fair contention. It's just one of those things about being in business.

    • Good point, Heather. Just wish I would have asked the right questions. Even if they weren't completely forthcoming, their reaction alone would have told me something was up. 😉

  • Cherie Hawkins

    Thanks Ed, once again you make me feel a lot better about those ones that I let get away and also (what I think anyway!) those fantastic ideas of mine I gave away for free!

  • Thank you for sharing Ed, I agree, this all quoting thing can be very annoying and time consuming. I learned the hard way, that in order to save yourself the precious time, you gotta ask what's the budget you're dealing with from the start (at least in my field of web development). I've wasted so much time on empty promises, meetings, calls, involving other people in the projects... felt so stupid to tell my friends in the end, "Oh, about that, sorry, never mind."

    Once, I talked to a prospect and he had no idea what he wanted to do with his website. He had a site but it looked quite outdated. So when he asked me what I can do for him, I asked, "Well, what's your budget? Since there is a big difference between $300 and $3000." He didn't say and started asking me how much I charge. I told him my hourly, but that didn't help since he doesn't know how much time is needed. So I told him again, what kind of work he expects to perform and with what kind of budget. He started with the old, "Oh, I just want you to look at my website and tell me what's wrong with it." I wanted to tell him straight, "Well actually, almost everything! From HTML 2.0 syntax to terrible UX and UI." Anyway, in the end, we agreed that he will consider the budget and gets back to me. Last time I checked (since 2 years ago), he didn't change a thing.

    Some might say, it was my mistake and I am simply a bad salesman. Hey, me too, I thought I've made a mistake! But since then, I wanted to be better and dealing with other clients, I put in more efforts and time on studying their websites, writing everything up, and communicating all the info to them... But guess what, people who had no idea how much they wanted to spend and what they actually wanted to do were never buying. They just talked... "Oh, I want it like this, oh wait, no, let me think more..." I mean, I've put in some serious thought, spent a lot of time writing it all up, and all I was getting, "THANK YOU, you've been SO helpful." So now, if a client wants an analysis of how to improve his website, "Ok, sir, let's talk numbers first..."

    • I feel your pain, Arkadi! One idea would be to create a separate service offering just to analyze someone's website and give them a detailed report on your findings and recommendations. You can make it easy and just have a flat fee for that (based on relative size of the site). Then, the upsell is the execution of the recommended items. This enables you to not only get paid to analyze and recommend, but also helps the client better determine what they need to do to get X results.

  • I learned some time ago that asking about budget was a good idea, and it makes sense. However, I have *never* gotten an answer to this question! The prospect always responds with some version of, "Well I was hoping you could tell me." In some cases I think it's part of the negotiation game to avoid going first, but in many cases I think people contacting me (mostly would-be authors) either have no idea what it will cost or they're afraid if they name a figure I will quote a higher price to match. Though they certainly know when you've quoted something beyond what they're willing to pay, no one seems to know in advance how much they're willing to spend (or are willing to share that info). Any tips or insights?

    • Allyson -- The budget question, to me, works best when you're dealing with VERY large engagements, such as the one in this story. Otherwise, I've found that it's better to get a project scope as early as possible and then verbally quote a ballpark in that initial conversation. If you create and maintain a master fee schedule, it's fairly easy to do this. The benefit to you? You can get down to brass tax quickly. The benefit to the prospect? They can self-qualify faster.

  • Sarah Webmediafx

    Another great article Ed, you've got so much insight it's ridiculous!!! Keep posting, love all your advice.

    • Wow, thanks so much, Sarah! So glad you're enjoying the material 😉

  • I dunno if that was your business to get. It's not so much that you lost $45K, but that you lost that time (and emotional stress) quoting it. I've been there so many times, and asking that budget question is CRUCIAL. Luckily, the bigger the budget, the more likely the client is to provide it to me. It's always the really small clients that want to play the 'Where's the budget?' game.

    • Good point, Josh. Basically, they were comparing apples to oranges. Maybe the project ended up going for $30k. So you're right that I didn't really lose $45k. But had I gone about this differently, I could have either presented a scaled back scope of work to match my competitor's proposal -- or I could have made sure the client understood that they were looking at two very different SOWs.

      BTW, completely agree that the bigger the project, the easier (and the more expected) it is to get a response to that budget question.

  • Cartrell

    Hey Ed.

    Thanks for the advice. I've not run into this issue (yet), but will keep these lessons in mind, especially #3.

    - C. out.

  • Ed Estlow

    Great article Ed! I'm going into a situation on Monday and these tactics will help immensely!

    Also, I'm curious how you might have reacted if you'd asked the questions and gotten specific responses. From your wrap-up description of the feedback, it seems like you might have lost the business anyway - or perhaps decided to walk away before working so hard on the proposal.

    • Thanks, Ed! Glad to hear this info came at a good time.

      Had I asked the questions and the client led me to believe that they were essentially looking at apples vs. oranges, I would have probably offered a different scope of work -- depending on what it was, of course. However, I suspect that the company that landed the business focused their pitch on the SEO portion of the work and downplayed the importance on quality content. Had the client indicated this was the case (based on their answers), I would have walked.

      My experience with many of these SEO shops is that they completely oversell what they can deliver in terms of SEO. And at the end of the day, the quality of the new traffic is not as good as before. Which means that conversion suffers. Plus, even when the right prospects land on the site, the content is so crappy, they end up leaving too.

      Problem is, it's often so hard to sell against all the smoke and mirrors many of these firms put out there. If I were a traditional content marketing firm and I had payroll, rent and overhead, I would find a way to sell against that. But that's not how I'm set up. I only want to work with clients who are either pre-sold on me or who understand my advantage early on. If I have to do a hard sales job or compete on price... I'm going to lose. So I walk way early in the process, before I waste too much time.

  • This is great advice, Ed! It is always good to know if others are being considered and the magnitude of the project not only to give a good estimate, but to avoid scope creep (which has happened to me at least once with clients who try to add more work but not for more pay). Some clients do it without thinking, but I also think some think the extra work is "no big deal," but it is for the freelancer whose time is limited!

    • Couldn't agree more, Megan. Thanks! 😉

  • Richard Hughes

    Hey Ed, great article.

    You know what?

    I had the same thing happen to me.
    Like yourself, never again...Lesson learned (the hard way!)

    Richard Hughes

    • You live and learn, right? 😉

  • Laura Roberts

    I like your suggestion of asking for the "post-mortem." Often, I think it just comes down to finding someone who'll do the work cheaper, but if they can give any insight into the process, that's always helpful.

    Also knowing if they're considering anyone else is huge! I've definitely had situations where clients gave the impression I was the only person they were thinking of hiring, only to later discover I was in a fierce competition with an unknown number of candidates. That, in retrospect, seems to me like a bad deal anyway; if they're not even being up-front about the hiring process, who knows what kind of games they play when it comes to paying your fee?

    • So true! Why put yourself in a fiercely competitive situation when there's better business to be had out there? Sure, when you're getting started and growing, you do what you have to do. But the goal should always be to work yourself into a position where you don't have to do that kind of thing anymore.

  • Dina Mylordou

    Only one catch: at least in the environment I am working in, the client is unlikely to give me an honest answer to the question #1 re other freelancers/suppliers. (That's why I stopped asking). They might not tell me an outright lie, but it could easily be something like 'not at the moment', 'we hope that won't be necessary', 'we really want to work with you', etc. Or, the intermediary, the advertising agency/design studio, will say 'I don't know'. Unfortunately, the same is also often true for #3. I still ask, but rarely get a useful answer.

    • Completely understand, Dina. Personally, I would still ask the question -- or some variation you think may either yield a straight answer OR will cause the prospect to flinch or communicate the truth non-verbally. I can often tell if they're telling me the truth based on the way they answer.

      • @EdGandia, good point, instigating [at least] a non-verbal, body language response.