Scoping Your Work
Scoping, this is a art and a science. And it will make or break you. So, it's a very important segment here. So, what we're gonna do is, we're gonna go into sort of my approach to scoping. We're gonna look at I think, at least three examples of scoping, and I'm gonna bring up a full proposal template and take you through the whole thing. For those of you who aren't fully aware of what scoping is, maybe that's not a word that you use everyday. Hopefully, it becomes something you use. Scoping is really trying to gauge an accurate list of deliverables, the things that you're gonna make for a client, the timeline, and the cost. That's basically it, I mean it gets a lot more complicated than that, but that's, that's what scoping is. And, in the context of, let's imagine you're a solo practitioner, maybe you're, you know, you're a photographer, you're a designer, you're an engineer, a client's gonna come to you and say, "Hey, I need this thing. I need small website built." And you say, "Grea...
t, let me scope it." Alright, so scoping it. We're gonna scope this thing. The best way to go about this, is to brake everything down into its component parts. You want to think about every part and piece of bringing this thing to life. So, the smaller you can brake it down, the easier things are gonna be to scope. But, counterintuitively where I start is with a timeline. It's probably not where most people start. Do you guys start with a timeline?
You do? I, Lucky, you've got it. Why are you here? You don't need the, this information. (laughter) Starting with a timeline, I think is crucial because to be honest, like I can't actually know how much something costs, unless I know how long it's gonna take to make it. So, I don't even bother with pricing yet, or, or people, or anything like that. So, I build a little projected timeline, I personally use Keynote, and then I use all the embedded tables in Keynote, 'cause it's beautiful, and it's fast, and I don't have to deal with switching between like Numbers, or Excel, or whatever. So, I'm gonna put a projected timeline in there. My top item, upper left hand corner it's item. So, items down here and then the week number. Now mind you, I used to make a mistake early on in the business, where I'd put dates, cause I was stupid. I would say, oh, you know, April one is the first date, and then it's May one. So, every week, you know the start of that Monday was the date. And guess what? Clients would get the proposal, and like, great, we'll get started April one. And then they sign it April eighth. And then they still want it done by the number that's right here, and I've lost two weeks. And there's no way that they're gonna move it cause like my boss approved it with the delivery date at that. So, that's lesson number one. Lesson number one. Just use the number of weeks. It will make your life so much easier. Almost every client will take longer to sign off on something than you expect. Sometimes they don't, but almost all of them do. So, I want to lay out the number of weeks this is essentially, quote unquote, a three month project. Right, 12 weeks. There's actually an average of 4.33 weeks per month. If you really want to get, you know, nuanced about it. But you can think about it as, in terms of four, four weeks per month. So, I need to think about all the pieces. This is an example, the example we'll use in this session is specifically, it's a website. Nothing, nothing too fancy. It's a website. So, I like to bake in, like, approval and sign-off. I like to say, that is the first thing that's gonna happen. You can see how it lays out on the timeline. We may or may not, do kick off and discovery that first week. So these little lighter areas, you're gonna see like light green, and then the darker one here. If they sign off that week, imagine they signed off on Thursday. I haven't really promised we're gonna do kickoff on Friday, like that might not happen. So, we're really, we're kicking off that second week of after sign off and we're probably gonna take two or three, two of three weeks to get kick off and discovery done. So, some of you, this is gonna be dramatically overkill, if you're just trying to scope and a, you know, wedding photography gig, or a one-day videography project you're not gonna have a you know, a 12 week time line. But bare with me, okay, you're gonna hopefully learn some things through the course of this scoping assignment. So, we're gonna do kick off and discovery. Discovery, is so interesting. It's also, I think, a litmus test. Discovery just basically means we're gonna ask a lot of smart questions so that we can understand you know, the client, it's market better, the objectives that we all have. We're gonna possibly do a workshop. Maybe we'll sit down for two or three hours, take them through some exercises. If it's a web project, maybe they already have personas developed about their possible customers and visitors. Maybe they don't. If they don't, we're gonna start to tease those things out, but quote unquote personas, are really in the, the UX/UI component of the work that we'll do. If a client says, "Oh no. We would never do discovery." Run. I will tell you right now, run. They are likely insane. They clearly don't understand how the world works. Now this, now I'm being too, too brash about it. What that says to me is, I actually had a client one time, this was for a large company. She said, "We refuse to do discovery. We are not paying you to learn about us." And I thought, I thought that you were? I thought that's exactly what you're doing. And how should we, if, how should we learn about you in order to do the work that we need to do for you, if it's not in our timeline? She said, "Well, we expect you to know everything about us before we start working together." I was like, and my, I can't ask, can I ask you questions? She's like, "Yes." I go, "That's discovery." She's like, "I don't want to do it." I'm like, "Okay, let's not work together." And then, she was the CEO, she's no longer there. She moved aside, the VP of Marketing was like, "She doesn't like consultants, and doesn't like discovery viscerally. Hasn't liked it in 20 years." I was like, "Okay. What do you think?" She's like, "I think we really need discovery. I think we need to do this." I'm like, "Great." So we worked together. So, that's an interesting little thing. You may, has anyone seen that before? If you have people who push back on discovery, strange. Okay, so, imagine we learn everything and everything about this client. We're then, for the, for the purposes of you know, this example, we're essentially describing a waterfall web project. Not to say you should do waterfall, but, this is not a class on waterfall versus agile development. And, I don't mean to have this be over the head for a lot of people, but, we're gonna go step wise. So, okay, we do our discovery. Now, we can get into all the user experience design components that we need to get into. For this small project, we think it takes three weeks. Then we can get into visual design. However, look at how these are staggered. Content development, can actually start before visual design starts. It can start before UX gets finished. So we're gonna start to think about the language we're gonna write, et cetera. So, some of these can start and stop at the same time. Front end and back end engineering can happen, then content loading. And then we're doing test and QA, then launch. So, pardon me for the over simplification. I think if my strategy team at home was watching this, they'd be like, "Peter, it's a little bit more complicated than that." But, we're just doing an exercise. So, I've got my timeline. Now, I take those items that we looked at, and I put them into a budget breakdown bucket, right. So, we've got them all here. And sometimes the descriptions are much longer. My objective when I'm writing a proposal is to write as little as possible, and make it as simple as possible. And not go into too much detail, if at all possible. While at the same time, not screwing ourselves by being too vague, which then there'd be all sorts of assumptions about what we're supposed to be doing. So there's this balance between like, do we need to write a novel about what we're gonna do for UX, or can I just write a one liner. Right, so you have to gauge that. And so, I don't have any costs in here. I've got my kickoff and discovery, I'm saying what it is. Visual design, I'm gonna say final PSDs of all screens and states. I know that, you know, now it's not as common to deliver PSDs for things. Designing in browser's become much more important. And possible. But again, this is not a, this is not a class on the current state of web design and development. This is just about scoping. So, I've got my list items, I got a budget breakdown. I'm actually gonna move over to my laptop here, so if we can bring up some costs. I'm sorry, I'm not gonna bring up some costs. I'm actually gonna show you rates first. In order to get into a pricing exercise, we have to have rates of some kind. These are not meant to be actionable rates for you, or for you at home, or otherwise. They're meant to be a little sample. And the most important thing to see here, is that you're gonna have different tiers of expertise. So, you could have junior people, mid-level people, senior people. And then, some people bill by the hour, some people bill by the day, some people bill by the week, some people bill by the month. For us, we bill by the week. So everything that we scope, is based on a weekly rate. We don't bill by the hour. We don't track hours. And that's a whole philosophical discussion that we can get into if you like. I think half of the world of creative service providers, they track hours and they really like tracking hours. And they'll use tools like Harvest to do so. And the other half of the world doesn't, and refuses to, and would never do so. And I think if we did, my team would be really unhappy about it. So, what we do, is we look at out weekly rates, and then we decide, well what percentage of my week is gonna be dedicated to this project? So, if I'm working on, let's say I'm a a mid-level designer. You know, I've been doing design for, you know, four, three or four years. So I'm not brand new to it. Getting in, get in a mid-level stage, and I'm gonna work on this project 100% of the time. For a week. The rate is two grand, right. So, we all get that? Does the internet get that Chris?
We've got it.
We got it. Okay. And if I want to extrapolate all this and do it in a monthly, you can see what the monthly would be. But we're not gonna use monthly's. We're not gonna use daily's, and we're not going to use hourly's for this exercise. We're gonna use weekly's. Good? Good on rates, alright, so, (audience member interrupts) Yes, go ahead, you've a question about rates.
Do you fraction?
[Male Audience Member] Fractions of weekly's? I mean you, let's say,
So let's say my week, that's a good question. Let's say my weekly rate is two grand a week for mid-level designer. But they're gonna work on this project and one other. 50% of the time, 50/50. What do you think they're weekly rate it? A grand
A grand, yeah.
Right, okay, exactly. So, we use percentage, we call it bandwidth, so percentage bandwidth times their weekly rate, to get the price that we're billing the client on a weekly basis. Okay. So this is gonna really come to, come to light now when I open up this cell here. So we've, right now you see that kickoff and discovery is $5,250.00. Now, mind you, when I built this, little description this is, this is an actionable budget. Like if someone came to me you know, we probably wouldn't do this project size ourselves anymore. This is a project size we might have done you know, for the first, call it, five years of our business. Like a 50K web project was great. Like, let's do that thing. Now, it's, it's a little bit less than our minimum. So, this would be discovery. So you have to think to yourself, "Okay, what is discovery? What are we gonna do?" I'm gonna open up this cell, now I know the viewing audience here, is not gonna see this as well, but online you guys will have a much better view. So, the way that this formula works, is I look at the number of people. So, one person, right. And then, how many weeks you're gonna work on the thing. What fraction of their time each week, multiplied by their weekly rate. And that's the cost of just one person for this deliverable. Now mind you, this is kickoff and discovery for a web project. So I need my project manager, I need my designer, and I need my developer. I need three people to be involved in the kickoff and discovery of, a very discreet small web project. If it was much bigger, you might have a project manager, a content strategist, a back end developer and a front end developer, and a director of technology, and maybe an associate creative director, with an art director and a designer. And that discovery budget gets much higher. Which is, which is wonderful. Or, or not, depending on, depending on who you are. So, one person, this is my project manager. Times three weeks. And they're going to work on kickoff and discovery 25% of the time over the course of those three weeks. Their weekly rate is $2,000.00 a week, cause I'm assuming they're a mid-level project manager. But, then I need to add my one designer for three weeks, at 25% of their time as well, for $2,000.00 a week. And, I need my engineer, one, one of them for three weeks, 25% of the time, but they're senior. So they're $3,000.00 a week. Done. So I've got my little cell. Makes sense? And what I think is so interesting about this, this is clearly not complicated math. But it is a, it's a very quick and easy way to think about scoping specific budget items. When you don't really, you don't really know. And it's almost like short form math. So, this, this budget, I've already scrubbed. Like I, made it originally, and then I looked at it and I was like, "Does it seem right?" Like if, if discovery came out to be half of the budget, it wouldn't be right, right. It's basically 10% of the budget. Which is 10% of the project, is 10% of our, the effort of this whole thing, wrapped up in like, getting it right up front, yeah, probably. Sounds, sounds about right to me. So, then I can move on. And I can say, okay, for the UX/UI component, I've got my project manager here again, one person. Another three weeks, now if I wanted to go back, I could look at my timeline, and say, "Okay, three weeks for UI/UX." I go back in, I've got my project manager for three weeks, 25% of the time, and their rate, but I need my designer for three weeks, but for 100% of the time. So you're multiplying by one, instead of .25. I want to let that designer be fully focused on this specific deliverable. If they weren't, it, it might take six weeks. Might take longer. So I want them to, to be able just to focus on this thing and knock it out. For a very, straight forward web build that might have, you know, a homepage, and like three or four internal template pages, you can do the UX work in three weeks. Knowing that comes from years of experience of making hundreds and hundreds of websites. But, that's neither here nor there. Okay, and then the weekly rate. So I look at that and go, "huh? Would you pay $3500.00 for someone to build the full skeleton, the blueprint of a website for you? Would the market bare that? Yeah. Yeah, seems about right. Okay, some gut checking as I go. Now look at visual design. And I can go back to my timeline again and say, "Oh, I've got four weeks for that." That's what I estimated it would take. So, I've got my project manager for four weeks, 25% of their time. Times two grand, and notice my engineer is not in here. Right, the engineer's not necessarily gonna work on the visual design component. In an ideal world, all this stuff is fluid and people are collaborating, but from a budgeting point of view, I just think about real, real levels of effort. And then front end and back end engineering, I have my project manager for six weeks, 25% of their time is focused on back end engineering things and front end engineering things. And you might wonder, what does a project manager do when there's coding happening? There's a lot of things that happen. And that's probably a whole 'nother class in and of itself. Could be capturing user stories, could be corroborating, what client feedback was on preexisting features, and then feeding them back in to get iterated upon. I've got my front end engineer for, one of them for six weeks, at a 100% of their time, at a $3,000.00 rate. And then I've got, I believe a, one back end engineer, 10% of their time for six weeks, for two grand. So, they're probably setting up a CMS, like WordPress and it's not a huge, heavy lift. And on down the line. I'm not gonna go into the content development and testing piece. I'm gonna talk about a couple other things. This included Word, is a , it's a, it's a magical tool you should use, if you need to. And, I'll explain a little bit more, in more detail. Over the years, one of the things that I've seen clients push back on, time and time again, is project management fees. For whatever reason, that seems to be something that people don't want to pay for. And, some clients. Some clients totally get it, and that would never be questioned. I've had clients say, "Well, I just don't know why we need a project manager." I say, "Okay. How, how dow we plan to manage the project then?" And they'll say, "Ummmm, Okay, Peter, I guess we'll have a project manager." Like you need, you need, you need the person driving the bus and keepin the timeline and making sure the deliverables are being hit, and having the phone calls set up, and making sure that all the things stay on strategy. And making sure that when design delivers some sort of design artifact, that the personas we've all agreed to would hate, that we bring that, we fix that before a client sees all the stuff that project managers do that are so important. And so, if you notice my formulas, I baked the project manager in up front, right. So, included doesn't mean free. If you want to read it as free, I'm happy to have you read it as free. What I'm saying is, I have included the cost of project management in all of the deliverables rather than as a separate line item. Cause I guarantee you, if I put $15,000. project management in there, they're gonna go "Oh, no, no, no. I need you to, you can't charge us 15 grand for project management, it's gotta be nine." And I go, "Why?" And they won't have a reason, but I'd rather not have that discussion. And this lets us not have that discussion. I love not having that discussion. It's much better. It's just semantics. And it's really just, where'd the, where do you add the numbers, the price would be exactly the same. And so, scoping is it's psychological warfare, to a certain degree. And, part of that psychological warfare is this included in the project management piece. It's also looking at, looking at these deliverables as well. And saying, wow, when the client sees $48,000.00, and they look at the breakout, are they gonna feel like, you know, is, is it right? That's the judgment they're making. Is it right and can I afford it? Or, is it wrong and should I push back on price, or whatever? And if you look at this budget, you're gonna see that essentially $32,000. of the project is the visual design and engineering. We are making a website. You can't not do the visual design and the engineering, so, and there's a lot of it that's gotta happen. And it's 75% of the project. So, are you gonna beat me up about the visual design and engineering? Probably not. You're probably not. So when I look at this, I go, "Okay, I'm probably pretty safe, with, especially with a percentage of the budget that's allocated to that." Where could I get beat up on? You gonna beat me up on $1,200.00 of testing and QA? I've never, ever had anyone push back on testing QA. Of, of all things, they would want more. Like, let's make sure that we really, really, really test it and quality assure things, so, okay. And it's such a small dollar item. If someone said, "Peter, we want to work with you, but we absolutely refuse to do testing and QA, or we refuse to pay for it." I go, "Okay. Not a problem, I'll throw it in for free cause I really like you." So, you have to think about where are people going to push on these specific pieces. Now you'll notice, this came, I came into this with a real big assumption. Do you see any people's names listed here? Do you see this listed by designer, developer, project manager? No. Clients are not buying humans. They are buying a website, in this instance. They care about the deliverables. They, I think they literally do not care whatsoever who makes the thing. It depends on the work that you're doing. I mean, if it's like, you're a world famous fashion photographer, they want you there with the camera and taking the pictures. You can't sell them that service and then not show up. In this instance, the fact that John Smith did the front end engineering versus Mary Jones, don't, they don't care. Does the thing work? So, I love to group things by deliverable and especially try to keep it as simple as humanly possible. And I don't know why people end up writing these incredibly long verbose proposals that describe the universe, the history of user experience design, when they're writing a proposal. My object, the best proposals I write, take me 20 minutes, and I send the thing, and they get approved. And they have no links or references to past work, nothing. Nothing. It's the price, and sign the thing. So, I see a question, yes. Probably a few, I'll pause here. Actually be a good idea.
[Female Audience Member] I did actually, I was wondering, do you have like admin or overhead costs like baked into your rates that you then, so it's like, for just running your?
For like, the, running of the company?
Nope. No, all of our, so if you want to get a little more detailed on how we arrive at rates. Maybe this would be instructive. Again, these are not, like our actual rates.
[Female Audience Member] Sure.
They're substantially different, in a good way. So, the way that you can build your own rates, internally, is to look at quote unquote, the fully loaded cost,
of that employee.
So, let's say let's say you have an office administrator, an admin, that you pay three grand a month, in a gross salary, so it's 36K a year, office job. Which is very low if you live in New York City, for example. Or, it's very high if you live somewhere else, not very high. It's like okay if you live somewhere else. So, you take the, the weekly cost, fully-loaded, three grand a month salary, multiply that by three. So nine grand a month. And here's why, and then you can divide by the weeks, to get the weekly rate. The employee keeps the first third, the government takes the next third, you keep the next third. So 33% of that total you billed to the client, the company keeps, and then the overhead costs come out of that.
[Female Audience Member] Got it.
And you'd likely, if you run an efficient operation, and you're a digital agency, you should end up with about 25% at the end of the year. So, 25 to, 30% is great. If you get to 30%, that means you're very, very efficient. But, very few shops get there. Go ahead.
How would this work with contractors, or freelancers? Creative cloud, if you will.
Yeah. Simple math, you can just double their costs. I mean, that's what I did in the early days. If it was like, "Oh, we're gonna hire a, a videographer and they're gonna charge me you know, five grand for a two day shoot, I'm gonna charge the client 10." Cause I don't have those overhead costs associated with them. And so the 50% margin piece, it's then, the government basically takes a third of that, and I end up with about 30%, and now I've, now my numbers can work. So, sort of the two X on outsourced freelance work is a useful mechanism.
[Female Audience Member] Great.
Yeah. Any other questions before I go on? Go ahead.
Yeah, but on your scoping slide, how, like, into the nitty gritty, like formula details do you get with clients?
I'm gonna show you, I think maybe my next slide, a full proposal.
[Female Audience Member] Oh, okay, cool.
Yeah, let me see, is that what the next slide is? Yeah, it's a video proposal. So before I go onto that, I'll see if, are there any questions online that we should go through, or no?
I think we're good.
We had some people who were asking about the rates, and, yeah, I think you covered this. But like, these are just sample rates. They were like, "Oh, are these like the real rates you use?" Like, "How much should I charge?" All this, it's gonna vary for people, right?
I will, let me address this even further. These are sample rates. I have to speak from the perspective of like Washington D.C., and New York, and the U.S. So depending on where these people are, possibly all over the world, may or may not be relevant, but from like a normal city in the U.S. point of view, you know, if you're hiring a junior designer, 25 is, $25.00 an hour is low. You probably get it at about $40.00. If you're looking at a mid tier designer, for example, 50 to 75 is about right. A senior designer's gonna go 75 to 100, 125 maybe. Engineering is a little bit different. Junior engineer, actually on the low end, junior engineer is probably about the same. Probably about 45/50 bucks an hour. Mid-tier is probably about $75. Senior could be as much as 100 to 150 bucks an hour. So, I'm really speaking way off the cuff, to possibly the world. And so rates vary dramatically across the spectrum. For us, we don't ever think about an hourly, so I don't know. And, we don't do a daily. The weekly, probably the lowest weekly rate that we have, is probably about $4,500.00 a week. I think the average weekly rate across the entire company, all of the seniorities, all 80 people, is like $6,750.00 a week. Now, the average cost therefore you can imagine, you could back into this and be like, oh, the average cost of an employee at iStrategyLabs, it's a third of that. I mean, I told you what the formula is. So, the average cost for me to employee someone fully-loaded, is about $2,200.00 a week. Okay, so there is some real salaries in there. That's the average, there are some that up and there are some that are lower.