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trackitverycarefullyusingBasecamp.Latelytheyx19vebeenexpressingthattheyaretightonmoneyandarequestioningourbillingforsomeoftheestimatingtheyrequested.Ifittakesusalotoftimegoingbackandforthtorespondtotheirquestionsandideasthenwedraftanestimatethentheydecidenottodothatprojectshouldnx19tthattimebebilledWhattochargeforandwhattogiveawayasacostofdoingbusinessisalwaysatoughcall.Obviouslythemoreimportantandpro7tabletheclientisthemoreyoucanaffordtogiveaway.Asaguidelinemost7rmswouldnotchargeforanestimateonade7nedprojectbutmostprobablywouldforplan-ingactivityorsomethingthatishypothetical.Iffeasibleyoumightalsowanttoconsiderincludinginyouresti-matesforthisclientaprovisionfortheextraworkthatexperienceindicateswillcomelater.Itwillcovermanyofyourfuturecostsbutavoidthesenseofbeingx1cnickeledanddimedx1dthatclientsoftenresent.Otherwiseyoushouldnotchargedirectlyforpreparinganestimatebutyouprobablyshouldmergethepreparationtimeittakeswithinit.Thiswonx19tcoverfutureexpensesonthex1cfalsealarmsx1dbutitwillontheothers.Awaysome7rmsusetodiscourageclientsfromwastingtheirtimeistoadoptaminimumfeeofatleastanhoursome-timestwoforanythingthatinvolvesmorethanansweringasimpleques-tion.Myrmhasonefull-timeandonepart-timeemployeebesidesmyself.Thefull-timeemployeehasbeenwithformeforalittleovertwoyearsstart-ingasaninternincol-lege.Ihavebeengiv-ingherraisesabouteverysixmonthstobringhersalaryuplit-tlebylittle.Shenowmakes16anhourandwantsaraiseto20.ShesaidIcanafforditbecauseIshouldchargeclientsthreetimeswhatshemakesandIx19mcharg-ingthem75anhour.IssherightIwouldlovetogivehertheincreasebutIcanx19tseewhereitispossible.Latelybusi-nesshasbeen0uctuat-ingbetween10000and15000amonth.Shemayormaynotbeworththe20anhourbutsheisrightthatemployeesalarycostshavetobemarkedupbyatleastthreetimes.Sobythatmeasureyoushouldbeabletoaffordtheraiseifyourlaborrateis75.Whyyoucanx19taffordthiscouldberelatedtohowbusysheis.Orthatsheisbusybutyouarenot.Youalsohaveonepersontoomanyfortheincomeyoumention.Unlessyoucanincreaseyourrevenueyouneedtogetridofthepart-timeperson.Withtwoindividualsbillingatleast50ofcombinedsalaryhoursat75anhouryoushouldbeabletopayherthe20anhourandtakehomeslightlymoreforyourself.Inthelong-termthoughyouneedtofocusonbuildingabaseofclientswhocanpayyou100anhourorhigher.Onlythenwillyoubeabletopayyourstaffgoodsalarieswriteyourselfagoodpay-checkandaccumulatethecapitalabusinessneedstosurvive.Ibilledaclient9000forajobthathadlotsoflastminutechangesandendedup1500overestimate.LongstoryshorttheyobjectedtomanyofmyrushfeesandIagreedtosplitthedif-ference.Igotacheckfor8250.IguredIwouldjustwrite-offthe750lossagainstnextyearx19staxes.HowdoIshowthisDoIhavetopro-videtheinvoiceandthecheckasproofUnfortunatelyunlessyour7rmissetuponanaccrualversuscashtaxbasisyouwonx19tbeabletotakeawritedown.Chancesareyouwouldknowifyouwereontheaccrualmethod.Ifyouhaveanaccountantwhichwehighlyrecom-mendedask.Ifyouareheshewillhandleitforyou.Inthecashmethodyoureportonlytheincomeyour7rmreceivesandtheexpens-esitpays.Intheaccrualmethodyoureportincomewhenearnedinvoicedandexpenseswhenincurredbilled.Inotherwordsinthecashmethodyoucountrealmoneycashintheaccrualmethodyoucountobligationsaccountsreceivableandaccountspayable.Most7rmswithoutinventoriesusethecashmethodbecauseitissimpler.Thisincludesmostself-employedindi-vidualsandsmalltomid-sizeservice7rms.Thereasonitisnotpossibletowriteoffabaddebtwhenusingthecashmethodisthatyoucannottakeadeductionforsomethingyouneverhad.Sosinceyoudidnx19treceivethe750youcanx19tlatertakeawriteoffforit.11BASECANCELLATIONFEESONTIMEWORKEDOR20OFJOBESTIMATEWHICHEVERISMORE.Feesforcancelledprojectsshouldnormallybehoursworkedtimesa7rmx19shourlyrateplusexpenses.Wedonotrecommendarbitrarykillfeesunlessprojectsarecancelledbeforesigni7cantworkhasbeencompleted.Therewerecommend20oftheestimateasfaircom-pensationforreservingproductiontime.WesuggestaddingthefollowingtoallproposalsIntheeventofthecancellationofthisprojectoranydelayofmorethanonemonthwewillinvoiceyouforthegreaterofeither1allworkcompleteduptothedateofnotica-tionincludingexpensesor220oftheagreeduponestimateplusexpenses.CREATIVEBUSINESSMANAGEMENTMETRICCreativeBusinessx14SeptemberOctober2011