Interesting to see what’s up for grabs (or not considering the cost of living) working in the valley tech scene.

Great post on the Sales Force use of gaming tactics to boost adoption.  I’m even starting to see gamification in the enterprise space. Recently we recommended a departmental information strategy be underpinned by gamification practices and processes. Time will tell if this catches on.

What is This?
We have developed this hourly rate calculator to give you a guide based on your costs, number of billable hours and desired profit. It is a simple tool for you to play with.

Remember your hourly rate should always take into account factors like market demand, industry standards, skill level and experience - things that unfortunately we can’t put into a calculator!

Use these calculations as a guide and then modify to suit your circumstance and conditions.

It will take you about 5-20 minutes to complete depending on how
much attention you give each calculation.

In this step you want to calculate what your total business costs will be FOR ONE FULL YEAR.

 

In this step you want to calculate what your total personal costs will be FOR ONE FULL YEAR.

 

 

 

 

 

Determining an hourly rate is often tricky (it always has been for me at least). Try this free hourly rate calculator to see what you should be charging.

Peter Drucker is one of the most influential business writers of the last century. His ideas have shaped the ways we conduct business today. One of Drucker’s main ideas was the notion that without a customer, there is no business. Furthermore, customer satisfaction is the key to the success of any business, or in his words: “The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer.”

To that, I say amen. Here’s the tricky part, though: satisfying all of your customers is simply not feasible unless you choose the right ones and let go of the rest. How do you do that? First, you have to set principles for identifying good customers. Then, evaluate potential customers against those principles, and bid farewell to those who don’t measure up… yes, even if you currently work with them.

Crafting Your Principles

The quest for good customers starts early on. It starts with deciding who your ideal customer is. Different companies have different ideals and cultures, and a variety of parameters are important for making this decision.

Here are the parameters to consider:

• Size
  What sizes are the companies you have enjoyed working with? Do you prefer to work with small family businesses or large corporations?
• Budget
  What is your minimum project budget? Will you take on a project with a tight budget if the customer is strategic?
• Payment schedule
  Would you agree to receiving the full payment at the end of the project? If not, what’s the minimum up front that you require? This is often a pain point for small businesses and freelancers, and I strongly recommend following a harsh rule here with no exceptions.
• Technical knowledge
  Are you willing to work with a customer who has minimal technical knowledge? How might this affect the outcome of the project?
• Project dynamics
  Are you looking for a customer who will just give you the requirements and then wait for the deliverables, or would you prefer a more engaged client? On projects in which you collaborated with the client daily, were the results better or worse than those of projects with less interaction?
• Length of relationship
  Are you interested in one-time gigs or a long-term working relationship? If you are thinking long term, estimate whether a particular customer would have enough projects to sustain that.
• Personality fit
  What kind of people do you like to work with? Check with other companies that have worked with your prospective customer to find out whether there were any personality clashes during their projects.

Qualification Is Crucial

If you get this right, you will gradually see your customer relationships improve. More importantly, you will be less likely to wake up asking yourself why you are working on your current project.

To keep it simple, I’d recommend a total of four to five principles; but as with everything, tailor it to your own business. One effective method I have found is to set your principles in a spreadsheet, rank them, and then decide on a cut-off average for qualification. This is a great tool for identifying deals with higher average scores or for deciding between two potential deals. We’ve prepared an example of such a spreadsheet (Excel Spreadsheet).

A simple and efficient way to determine whether you’ve ranked your principles correctly is to look at past projects and make sure they align with your cut-off average. Specifically, make sure that past projects that really sucked get a low score, so that you avoid taking on similar projects in future.

Don’t be afraid to share your principles with potential customers. Some might show flexibility. A few years ago, when I approached a freelancer for a potential design project, he made it clear to me that he would charge 50% up front and 50% upon completion of the project. I told him we couldn’t accept such payment terms. He immediately wished me luck. You know what? I was so impressed by his confidence that I called him back and hired him anyway.

Self-Qualification

The qualification principles are important because they can also be a great time-saver. I call this self-qualification. The idea is simple. Now that you know what matters most in your relationships with customers, you can signal that on your website, filtering customers who you would never want to work with.

For instance, you can be clear about the prices you charge and the projects you’ll take on. Read this beautifully crafted message from Forty:

“We try to avoid very small projects (under $10k) because our process doesn’t work well at that scale. Likewise, we also pass on very large projects (over $300k) because they’re just not much fun to work on.”

You can be sure that Forty is saving a lot of time by not dealing with customers who want a plain WordPress skin for $500. The company also subtly hints that the big guys needn’t call it either. It has decided that it doesn’t enjoy big lengthy projects, which are usually initiated by big messy corporations. To make sure prospective customers get the picture, Forty specifies its hourly cost straightforwardly: “Our base rate is $145/hour.”

Another beautiful thing to notice is that personality comes through the text on the website. You can be sure that anyone who takes themselves too seriously won’t be contacting the company. And that’s perfect! It helps the agency focus on the right set of customers.

We see the same approach with Blue Flavor: clear, detailed pricing accompanied by a clear message, setting the stage for the initial communication:

Nclud takes a different approach by including a drop-down form in which the customer can indicate their budget. This again makes clear the range of projects the company is willing to take on:

Ngen uses the same “trick.” The difference in the messages that these two menus send is interesting. Judging from the budget ranges, Nclud probably handles bigger projects:

Never Too Late To Say Goodbye

Assuming you’re passionate about your profession, let’s make one thing clear: you should enjoy the work that you do. If you don’t enjoy your work, that means you’ve taken on a frustrating project or, worse, a frustrating customer.

That can happen. In fact, it happens a lot. And even if you employ the principles mentioned above, it will still happen. But that doesn’t mean you have to continue suffering. No matter how many hours you have invested, if a project doesn’t work, it will continue not to work, and you will only experience more grief. Kill it as early as possible. That would be best for both you and the customer.

So, why would you fire a customer? Let’s look at five reasons:

1. The customer is abusive.
   This is an easy one. You should be treated with respect and dignity, and you should not tolerate any kind of abusive language or behavior. Period.
2. You don’t get paid on time.
   You are not a bank. Be willing to bend over backwards for your clients, but they must pay you on time. A customer who doesn’t understand this will hurt your cash flow and, eventually, your business.
3. You get phone calls at nights or on weekends, even though you insisted otherwise.
   People have to respect your time and not act as though they own it. You are selling your professional services, not yourself.
4. The scope of the project perpetually increases, but the customer refuses to increase the budget.
   This happens a lot. You start a logo, and then the client asks you to throw in a website. The responsibility for setting expectations is yours, but if you do that, and the customer still pushes for more without being willing to increase the budget, then you’ll end up with an unprofitable business.
5. The customer doesn’t respect you professionally and ignores your recommendations.
   To stop caring and just take orders from the customer takes all the fun out of a project. It kills your productivity, erodes your portfolio and stunts your skills.

Obviously, an important question is whether you can afford to fire your client. This is a valid concern, and it depends on the circumstances. This goes back to what you value in customers, and so this will vary from company to company.

If you have many projects waiting on deck, you could probably fire a customer without hurting your revenue. In fact, by working with someone who don’t fit your business values, you are probably giving up on great customers who could take your company to the next level. Take all of these factors into consideration when deciding.

If you do decide to fire a customer, you should seriously consider how to go about it without hurting your relationship with them and without risking your reputation.

Some ways are better than others. The fact that you didn’t get along with this person doesn’t make them bad. It simply means that your values or personalities do not match. More often than not, you will be the one who has to pick up the phone. Follow these steps:

1. Prepare for the call. Look hard again at your decision to make sure it is the right one.
2. In the call, explain the reasons for your decision, and point out that it was a business decision, not a personal one.
3. Help the customer find someone else who would be willing to work with them. Other firms or professionals would likely be happy to get the opportunity.
4. Bill what you deserve.
5. Note what you learned from the relationship, and add it to your qualification process.
6. Most importantly, move on.

At the end of the day, the Pareto effect applies to some degree: 20% of your customers are profitable, fun to work with and contribute to 80% of your growth. The ideas explored above could help you increase that 20% to 30, 50 or even 90%.

In Conclusion

Working with the wrong customers has ramifications. Designer David Thorne relates one email exchange of his that serves as a funny yet unfortunate reminder of this. It didn’t matter to David that he had already spent hours working for that customer; he understood that the relationship was not for him, so he ended it.

If you are disciplined and follow this simple process, you will see an increase in successful projects. And your life will be better, too.

Related Posts

You could be interested in the following related posts:

• Turning All Clients Into Dream Clients (or Common Client Difficulties)
• Breaking Down Doors: Promoting Yourself To Dream Clients
• Renegotiating The Contract (And Other Tales Of Horror)
• How To Spot A Sketchy Client (Plus A Contract Template)
• Dealing With Clients Who Refuse To Pay

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Allison Miller, aged 14, sends and receives 27,000 text messages a month. Hey, that’s only about sixty an hour, every hour she’s awake.

Some say that the problem of our age is that continuous partial attention, this never ending non-stop distraction, addles the brain and prevents us from being productive. Not quite.

The danger is not distraction, the danger is the ability to hide.

Constant inputs and unlimited potential distractions allow us to avoid the lizard, they give the resistance a perfect tool. Everywhere to run, everywhere to hide.

The advantage of being cornered with nowhere to turn is that it leaves you face to face with the lizard brain, unable to stall or avoid the real work.

I’ve become a big fan of tools like Freedom, which effortlessly permit you to turn off the noise. An hour after you haven’t kept up with the world, you may or may not have work product to show as a result. If you don’t, you’ve just called your bluff, haven’t you? And if you do, then you’ve discovered how powerful confronting the fear (by turning off the noise) can be.

Ten years ago, no one was lost in this world. You had to play dungeons and dragons in a storm pipe to do that. Now there are millions and millions of us busy polishing our connections, reaching out, reacting, responding and hiding. What happens to your productivity (and your fear) when you turn it off for a while?

I had the pleasure over the holidays of reading Charlie and the Chocolate Factory to my daughter.  It's a wonderful piece of literature, and a great reminder that movie adaptations of great works generally pale in comparison with the original text.  Roald Dahl was nothing if not a creative genius.

A special bonus for me was the inclusion at the end of the book of this transcript of a converation with Roald Dahl.  It's an exemplary interview, focusing on his process and way of working.  In particular, I found the following passage remarkable:

…I never come back to a blank page; I always finish about halfway through. To be confronted with a blank page is not very nice. But Hemingway, a great American writer, taught me the finest trick when you are doing a long book, which is, he simply said in his own words, “When you are going good, stop writing.” And that means that if everything’s going well and you know exactly where the end of the chapter’s going to go and you know just what the people are going to do, you don’t go on writing and writing until you come to the end of it, because when you do, then you say, well, where am I going to go next? And you get up and you walk away and you don’t want to come back because you don’t know where you want to go. But if you stop when you are going good, as Hemingway said…then you know what you are going to say next. You make yourself stop, put your pencil down and everything, and you walk away. And you can’t wait to get back because you know what you want to say next and that’s lovely and you have to try and do that. Every time, every day all the way through the year. If you stop when you are stuck, the you are in trouble!

His insight flies in the face of common wisdom around this subject, which goes something like "when in flow, keep going".  In other words, stay with the muse lest it float away.  Having the confidence to "stop when you are going good", coupled with the ability to crank it up again the next day, feels like a more mature place to be in terms of one's personal creative process.  I bet it takes practice.  But, if it leads to more sleep, fewer late nights, and more perspective on what matters and what does not, I'd wager that all of us engaged in the art and science of bringing cool stuff to life would be in a better place.

I, for one, am going to start stopping!

 

 

Finding quality feedback and advice on the feasibility of their ideas has always been a challenge for entrepreneurs. Traditional consulting firms remain out of reach, while free advice from friends and family can lack true objectivity. Hoping to fill this gap, Austrian feedbackers.biz offers quick, professional advice on new business ideas.

The company employs a team of consultants who will assess an idea within 24 hours as part of a USD 99 ‘Quick Check’. Potential clients fill out a contact form and they are then contacted for a detailed discussion of the idea in question. At this point, they may request feedbackers.biz to focus on a particular area, such as design or competitors. The service — which is available in English, French, German, Russian and Spanish — promises to evaluate each aspect of a business plan, from the strengths, weaknesses and risk factors associated with the concept to the accuracy of financial calculations. A ‘Close Look’ option is also available clients who seek more comprehensive analysis of their plans.

The main challenge for feedbackers.biz is to prove that its advice is valid. For example by including client testimonials and offering more information about its consultants. And how about publishing a sample analysis? In order to succeed, it will also need to be able to reassure potential clients that it won’t ‘steal’ their ideas. That said, there’s definitely a market for professional advice with reasonable and transparent pricing.

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Spotted by Marc Zafiriadis

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