SmallBizResource Blog -- Freelancing

A New Angle on Pricing Your Projects

Posted by Gayle Kesten Thursday, Mar 27, 2008, 09:23 AM ET

In an effort to win over a new client, could you be underestimating the time it'll take you to see a project through to completion?

If you answer no, then clearly you've learned from a past mistake -- one that might have put you in the awkward position of missing a deadline, charging a customer more than you originally quoted or, maybe worst of all, eating the cost for the sake of a business relationship.

One way to become better at estimating your costs and time needed for a project? Try the Rule of Π.

Yes, Pi, that irrational, transendental number from geometry, neither of which I have given a second's thought since 10th grade. That is, until I read David Strom's Web Informant blog, which highlights how tricky it can be for contractors to accurately assess how long a project will really take to complete.

The Rule of Π was borne from an IT manager's frustration with contractors who seemed to need about three times as long to complete a project than they originally said it would take. As a result, he'd multiply whatever a contractor told him by 3.14 for a better sense of what he was in for.

From a contractor's point of view, David has a few theories about why reality might not match estimation: Maybe it is because IT people really want to serve their clients, and set themselves up for unreasonable expectations right off the bat by underestimating their work product. Or maybe it is because the work product is so ephemeral to begin with.

Another possibility: Perhaps you took the initiative on a few extras because they were in your client's best interest. What better way to build a long-term relationship?

Then you have the client who increases a project's scope while you're already knee-deep into it. It's very possible the client didn't anticipate a few issues that would arise during the course of the project. Maybe you didn't, either.

So why not put the Rule of Π to work for you as well? Because as sure as Π remains 3.14, pricing a project in terms of time and money is going to be a constant challenge.

Freelancing