The art of giving an estimate (that's helpful)

Chris Lema

art-of-giving-an-estimate“Ok, but just back of the envelope, and I won’t hold you to it, how long will it take to get it done?”

I can’t even count the number of times I’ve heard that question in twenty years. But I can estimate it. :)

Let’s see, three times a week, 40 weeks a year, twenty years – oh I’ve heard it at least 2400 times. And here’s what I can tell you:

  • People always get anchored to the very first estimate they hear
  • People will hold you to it, even when they say they won’t
  • If it’s non-trivial and new to you, you will be wrong

But they keep asking. Right? So let’s talk about the art of giving an estimate to someone in a way that is actually helpful.

Why people want estimates in the first place

To be helpful in giving people an estimate, I think you need to know why they want one. So let’s head to the mechanic’s shop where you drop off your car. And let’s further assume you know nothing about cars (like me).

When I ask for an estimate, I’m doing two things at once:

  1. I’m comparing it to other estimates to evaluate the person giving me the quote
  2. I’m comparing it to the money I have available to see if I can pull it off

The first is a sanity check. The second is a security check. After all, I would like to make sure I don’t get ripped off, and I want to eat this month.

But notice what’s happening – I’m dealing with issues that are actually far removed from the actual estimate itself. I’m dealing with the fear of getting ripped off, and the fear of getting myself into something that will be overwhelming.

And guess what? That’s exactly how your clients feel.

  • They don’t want to get ripped off.
  • They don’t want to get in over their head.

Do you know what this means for you?

It means that to really do your job well you don’t need to focus on creating a perfect estimate. Exactitude isn’t the order of the day. Instead, what’s really important is to deal directly with these two dynamics and fears.

Empathy helps.

Software engineers and web developers think that estimates are just another puzzle that needs to be solved. But it’s not. It’s a relational and emotional moment that can mitigate risk and fear (or grow into a nightmare).

So how does a conversation like this go?

Typically I deal with the estimate question in three parts. Let’s look at all three.

The first is the awareness of the inexact nature of estimates.

“Do you have a favorite restaurant? Do me a favor. Think about it right now. Visualize it. And you know how to get there from here, right? You can see the map in your head? Good. Now, tell me how many minutes it will take you, if you left right now, to get there. Be as exact as you can.”

A prospect will quickly determine that it’s almost impossible – even for a trip they’ve taken many times – to get the exact timing down right. And it’s even harder to leave from a new destination.

That’s when I explain that estimates are rarely something you can get perfect. Sure you can have a really big ballpark range – like knowing that there’s a decent chance that you can make the drive in under 15 minutes. But you can’t predict traffic, an accident, or anything that could easily turn it into a 45 minute drive.

The second part is the focus on the real issues of getting ripped off or spending too much.

 “My guess is that since we can both agree a perfect estimate isn’t likely to happen, what you really want to know is what this whole thing is going to cost you. And you’re asking because you don’t want to get ripped off. As you can guess, neither do I. And there’s just as much chance of either happening – even when we’re both well-intentioned.

So here’s an approach I think might help us.”

What I try to do in this portion of a conversation is highlight that we both have risks in the game. He doesn’t want to spend more than he has to, and I would like to make enough profit to make the project worthwhile (and I definitely don’t want to work for $2/hour).

During this part of the conversation I’ll also ask if a person has a budget, so that we can get directly into how we might make that budget work. But people fear giving you a budget because they think you’ll charge them the total, even if it might cost less.

That’s when I might say something like,

“I know you may think that if you give me a budget I’m going to make the project use up all that budget, even if it’s smaller. Let me assure you of one thing – and this isn’t personal and it’s not you. Most people’s budget is 2-3 times smaller than their desires or expectations.”

It’s critical to explain to people that because software is complicated and you can only see one part of it, that most people underestimate cost, not over-estimate it. So the likelihood of them giving me a number that is bigger than mine, after they’ve shared what they want, is low.

Two weeks ago a pool contractor came to the house. We told him what we wanted. He asked me my budget. I told him what it was. He smiled. You know why? Because the number I said was 66% of what my heart and mind wanted and dreamed of. So he asked if I wanted him to design something for my budget, or to design what I had described.

We should all learn from pool contractors. Because he had me smiling the whole time. (And yes, I’m paying more because I want what my heart – and wife – want.)

The third part is my approach to solving the estimate issue.

In the end, it’s not like I can just tell a person to not ask me for an estimate. I know they’ll want one. So this is where I explain my approach that I think will help them.

“Right now we don’t even have enough detail to get you a good or accurate quote. But I know you need something to evaluate me by, compare me with other options, and to do a sanity check. At the same time, I don’t want to give you a number that I end up having to stick to, even as your scope grows. So let’s do this.

I’ll spend the next xx hours over the next xx days to interview you and get many more details. This will create a more formal scope of work. It will give us a much stronger sense of what we’re going after. And at the end, I’ll give you my “not to exceed” fixed bid.

But with it, I’ll give you a clear and focused scope, with an understanding that changes will get new estimates/quotes. Also, this time I’ll spend to get you this number, will actually cost you.”

Yes, that last line is critical. I’m doing work. I expect to get paid. Sometimes my “scope” phase costs $500. Other times it has cost $3,000 or $5,000. And a few times, for really big projects, it’s cost more than that.

But they get value (a refined articulation of scope) that they can take with them (and check out other competitors if they like).

And in this way, we mitigate the risks and fears they had.

So there you go. That’s how I do it. What have you learned about giving an estimate that I could learn from?

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  1. Another important aspect decoded and how! Always enjoy reading your perspectives Chris. I would like to add that over and above what you’ve said, we @crplz do put a figure to our estimates, but that’s not linked to the client’s work, it’s a generic figure. $1000 for what all we provide in it, for the first year and then standard figures for subsequent years maintenance, etc.

    However, we rarely leave the costs on the paper without mentioning the scope (estimated) attached to it. So say you’ve a 50 page website, we’ll do that for this price, but the photography, copyrighting, etc. will be extra, for example. It helps narrow down the estimated elements which’ll mostly decide the costs/pricing. It also help the clients view which road they’re taking to their restaurant and how much traffic they might face at this hour, if not calculate exactly how many minutes they’ll take to get there (ref to your analogy).

  2. Thank you!!! This has been the best post I’ve ever read on giving an estimate. I have ended up working for $2 an hour too often. I clearly don’t value my time!

    Taking this to heart today!

  3. Really helpful. Thanks for this.

  4. Clear, concise and as helpful as always! Suggestion on a future topic: Revising estimates when scope changes.

    I just wrapped up a great project, really beautiful site and a great client to work with. One thing though, we estimated based on wireframes and then when we received the PSDs to start work on there were a few things that I _should_ have noticed were out of scope and would take a lot of extra time, as can often happen in a rush though I didn’t. Then 2 weeks later deep into it I didn’t have the sense to stop, swallow hard and say “hey, I should have told you this when we got the PSDs and before we got started, but A, B, C were not part of the original scope and estimate”.

    FWIW, We did talk internally and decided not to rock the boat mid project in favor of keeping a great client relationship. It would definitely have been better to avoid needing to have that internal discussion, but In hindsight that was the right choice in that specific scenario.

    Looking forward to seeing you next weekend!

  5. Thanks, Chris. Great road map to a successful bid. Hope you’ll write more someday about the questions you ask in that second step.

  6. chriso199 says:

    I have always rated Software Estimation: Demystifying the Black Art by McConnell. It’s a great book, maybe not quite as relevant if you’re freelance but it has some great concepts and ideas in nevertheless.

  7. Fantastic, thank you. Estimates tend to be a sore spot for me precisely because I’m putting good time into developing a good estimate but it’s work for which I’m not getting paid. There’s only so many hours in the day.

  8. I will have a chance to try out this approach at a client meeting in two days. For the first time ever I feel like I will be well positioned going into the conversation.

  9. Excellent article Chris and great analogies – I love the conversation with the pool contractor just great! Best advise in a long time especially the conversation about developing for your budget or for what you really want. Nicely handled and doesn’t ruffle feathers.

  10. Katie Keith says:

    Really interesting article, thanks. I’m interested to know how many of your potential clients actually go ahead with a billable ‘scope phase’ before they have received any idea of your costs – if they’re contacting several people for a quote, why would they pay you for a scope phase before they know whether they can afford you? For complex projects without clear requirements, I sometimes quote for a scope phase rather than trying to make an estimate that will inevitably be wrong – but the client nearly always goes with another company who is prepared to make an estimate despite the lack of clear requirements.

    • Chris Lema says:

      Most of my clients who don’t have a clear articulation of their need go thru a paid scoping phase. Now, to be clear, most of my projects are larger, so they know they need to get the scope right.

    • Most, but definitely not all, of the clients that have walked away rather than paying for a scoping phase up front I’ve been fine, if not happy, with losing. Often it’s a tool to used to qualify clients, not just get paid.

      Katie – I would suggest perhaps that if you’re losing those clients you want then you’re not selling them well enough on your skills and ability to deliver and you need to think about that.

  11. Chris, maybe I’m reading this the wrong way but what does this mean? -see image

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