Step 4 of Quotation Process: Crunch The Numbers
Determine what tasks will be needed to accomplish the project; then assign a range of hours to each task–from best case scenario (low) to worst case scenario (high)—or low Xhrs to high Yhrs.
From the task list of hour ranges: Add up all the Xhrs and all the Yhrs; the total will then give you a grand total range of XhrsT to YhrsT.
From the hours grand totals: Multiply your hourly burden rate $B x (XhrsT to YhrsT) = $Low to $High cost.
Other tips when presenting cost:
–Establish a minimum of two rounds of changes.
–Add 15% if in doubt.
–After doing all the calculations, you may still feel that there are too many unknowns, or that the client hasn’t been able to provide you with enough facts. If you just don’t feel comfortable with the figures, then you may want to propose a different approach with the client (for example, you may want to propose that the project be done “by the clock”, with periodic status reports). This may be better for both parties.
–Avoid the request for a do not exceed clause if too many unknowns and dependencies exist. If you do agree to a do not exceed, make sure you incorporate a disclaimer that more hours may be required if the original scope changes.