Jamie Thomson's List: BizDev

• • Time and materials
   
   
   
  • Fixed-fee
   
   
   
  • Use-based pricing
   
   
   
  • Licensing
   
   
   
  • Hybrid
   
   
   
  • Free
• A time and materials relationship is the easiest to understand and document, but the big drawback is that your billings will not reflect the ultimate value or impact of your creative services.
• The goal is for your total price to reflect the real value of the work to the client, as measured by the positive impact that it will have on their business. At the same time, your total price must be competitive within the marketplace for design services. It's important for your fixed fee proposal to be very specific about the exact scope of work-what is included and what is not included. This is because clients will almost always make additional requests after the project has started. You can only identify those requests as being outside of the original scope if indeed that scope was well defined in the first place.
• When negotiating compensation issues with clients, many designers keep a simple formula in mind: “fast, cheap, good-pick two.”

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• a) Simple daily rate
• For example it may be a thirteen week commitment which would imply 65 working days and therefore a total fee of £65,000. Typically the client will pay reasonable expenses, reimbursed at cost in addition to the basic daily rate.
• b) Retainer
• c) Fixed price
• d) Contingency / success fee
• The challenge with this type of arrangement is reaching agreement with the client at the end of the assignment as to the amount of benefit that has been delivered.
• e) Time and Materials basis

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• Minimal hourly rate

• Fixed-fee projects tend to put the client and provider on opposite sides of the table, with orthogonal motivations. The client’s motivation is to achieve as much as possible within the fixed price, while the provider’s motivation is to complete the project as quickly as possible, maximizing profit and minimizing risks (and as a possible consequence, minimizing innovation).

  Fixed-fee projects also tend to demand that detailed requirements are agreed up front, the production of which often waste time and money, as final products rarely reflect original specifications. And such projects also suffer in the close monitoring of requirements, and the production, negotiation and agreement of contract modifications when the inevitable scope changes occur as the project evolves.

  Charging hourly, on the other hand, works to align the client and provider interests, and allows for the agile, iterative approach to project development that’s becoming ever more accepted as the best path to efficiently meeting objectives, while maintaining a balance of value and cost.
• Should design be priced differently than development, for instance? I supposed if all I did was design logos, charging hourly wouldn’t be a smart strategy. But what about a business in which the work usually spans the whole spectrum from strategy to tactics, design to development, and even operations?
• hourly and effort-based pricing
• it also happens to be the model of a firm we tremendously admire, IDEO

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• The process that I most often follow to get there is:
   Research > Strategy > Design > Evaluation

   

  This is a holistic approach that continues to yield terrific results. Every project is unique and I treat it as such.

   

  Depending on your company’s needs, budget, and timeline, I will offer the appropriate combination of the following services

• Pricing Policy

   

  I am a consultant and not a freelancer, so I charge a flat project rate that is based on your budget and timeline, and the complexity of the project. For longer-term clients, I offer a retainer fee.

   

  I don’t measure the value of my work in the number of hours that I spend working, therefore I don’t charge by the hour. If I take half as much time as someone else would to get things done, that surely doesn’t mean I’m half as good; on the flip side, if I take twice as long, you shouldn’t be penalized.

• But…How much will it cost?

   

  It depends, of course, on the complexity of your project. However, if you are working on a fixed budget, absolutely let me know, so that I can tailor my proposal to give you the biggest return for the buck. Some general guidelines for what clients might be able to afford:

   
   
  • Tiny Budget (<2K): Expert/Heuristic Review.
   
  • Small Budget (<5K): Un-moderated, Guerilla, or Mobile usability test; Limited scope Information Architecture.
   
  • Medium Budget (<10K): 6-8 participant usability test or user research project; Medium size Information Architecture project; Persona project based on existing research
   
  • Bigger Budget (>10K): Complex and/or larger sample usability tests or user research projects; Eye Tracking studies; Research with multiple user groups; Large/Complex Information Architecture projects; Fully functional prototypes.

• + Business Perspective
  - Chapter 3: Proposals for Consultants and Freelancers (15)
  - Chapter 4: Project Objectives and Approach (10)
  - Chapter 5: Business Requirements (15)
• - Chapter 14: Transition: From Design to Development and Beyond (10)

• We begin each project with a Scoping phase which anchors the project priorities, helping us to define appropriate functionality, content and design strategies. We learn about the project context, the needs and motivations of stakeholders, establish the project boundaries and objectives, and begin to map the opportunities.

   

  The Scope focuses on user experience strategy rather than detailed specifications; in this way we leave room for the project to evolve from the shared understanding we develop through the project. We commence by immersing ourselves in the design context, absorbing provided materials and doing initial desk research to prepare for the Scoping Workshop.

   

  The key elements of a Scope are :

   
   
  • Discovery: defining the project’s vision and its constraints
   
  • Immersion into the world of the stakeholder
   
  • Opportunity and Content Mapping
   
  • Preliminary Concepting
   
  • Initiating co-design
   
   

  The Scoping workshop is recorded, translated and reflected back to you in a scoping document which maps the project objectives and design recommendations, including primary and secondary stakeholders. It also provides high level plans for content and key delivery channels and can include workflow maps and diagrams when appropriate.

   

  Driven by the prioritised User Stories, the scoping document lays out the roadmap for the next iteration of design and development.

• • Step 1: The discovery meeting
   
  • Step 2: User interviews
   
  • Step 3: Project deliverables: audiences, outcomes, and personas
• Making things measurable

• Hourly rates - or even project rates are not sufficient. Designers can be evaluated on many scales, but four come to mind as crucial. Knowledge, experience, efficiency, and motivation.

• My (minimal) approach was, and still is, to divide the project into two parts. Part one, is to define the problem. This can be estimated fairly precisely. The second - to solve the problem is most always a guess until the problem is defined. Both of these are estimated with some combination of: a cost plus margin formula, market supply and demand as reflected in comparable rates, and value to the client.

   

  The larger issue of keeping a project on budget is similarly not simple. I use the written scope of the project, along with line item resource budgets, and delivery timelines to help control project costs. Drop any one of these and you have a potential loophole that can suck the life out of you earnings and profit. The result - you could be working for pennies an hour in short order.
• Employers (I am one) and clients (I work for them) will be willing to pay
   more for a higher *perceived* value. You may know that you are getting
   better at interaction design by gaining skills, experience and perspective.
   But if you haven't applied yourself to demonstrating, presenting or
   persuading those who pay you that your improved skills have resulted in
   *value* to them, then they will tend to have the same perceived value of you
   as before.

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• I will often throw out figures to gauge a reaction, e.g. "Do you
   want us to do extensive user research? That could add (fill in your blank)
   dollars to the project." Their reaction, if they react, to the question
   gives me a clue to what kind of budget they have. Sometimes I will say,
   "This project could be as high as X and as low as X depending on what you
   want done." And again try to gauge their reaction. Any clue helps.
• Define your
   deliverables as clearly as possible so that you don't get caught by
   unexpected features that you didn't know were expected. You can always add
   them to the contract if they come up. Do not leave your deliverables
   undefined -- such as "HTML for all screens needed to complete the site."

• We should be careful with discounts in our industry, lest people think they
   can something for nothing. The best advice I've gotten is that clients
   should "feel the pain." If we lower our estimates, it should be because
   we've taken something away: one less design iteration, fewer usability
   tests, etc. The long term effect I'm worried about is a financial de-valuing
   of the worth of our work as designers.

   

  Outside of design consulting field, Professional A/V vendors (a world I'm
   close to as a production manager) include "nice to haves":
   useful-but-non-essential equipment, specialized people dedicated to tasks
   that could be shared among existing hired staff, etc. Vendors start off with
   estimates geared toward people who can write a check. But regardless of the
   economy, I start trimming out stuff that would be nice if it fit the budget,
   but that we can live without on the current go-round. And you can bet when
   the event producers I work with can afford it, I'll have those things in
   mind and bring them back in.

• “A question well put is half resolved.” –Paul Souriau, 1881 (quoted in Keith Sawyer's 'Explaining Creativity')

• I've been suggesting that for proposals the UX side of things are estimated by Phase, rather than by activity.

    

  For example. We can estimate a total of 3 weeks for the discovery phase (goal is to define scope and business/user requirements based on user research activities). During these 3 weeks, the UX consultant will perform a series of activities s/he sees necessary in order to achieve the desire results (ie. Workshops, focus groups, personas, etc). Of course we will detail the activities we will perform on the proposal, but we won’t break it down by hours for each activity.

    

  In other words, the estimation process will be by results/deliverables rather than by hours

• When I calculate a project I do it this way (in most cases):

  I ask the client / project manager

   

  1. Is there a determined release date? - Then I check is it at all possible to achieve
  2. What about the budget? - Then I ask myself is this a viable budget and are these viable circumstances.
  If both OK and fine ...
  I think about the UX needs and efforts = deliverables
  1. What are the minimum requirements/deliverables and what are the best practice requirements/deliverables
  2. What are variable parts, efforts and deliverables
  And then I do a mix calculation based on experience and empirical findings by former projects ( and clients ;-) ).

• We subscribe to the philosophy of Blair Enns of Win Without Pitching (http://www.winwithoutpitching.com/) in terms of not creating detailed estimates until we have a signed contract to do a Phase 1 (the Discovery Phase you describe below). For the Statement of Work for this initial phase, we provide a list of the activities we always plan to do plus anything specific to this project and set aside a bucket of hours plus a bit extra to allow the project to move forward while the PO for subsequent work is being approved -- for example 4 weeks of hours if we only plan to use 3. We state in the SOW that any unused hours will be applied towards the next phases of the design effort once we complete the investigation, finalize the scope/features in detail, and create a project plan. Often the subsequent Phases of the project are fixed bid, but we've found that having the initial Phase be hourly is nice and flexible for both sides. If the client really wants it to be fixed bid for Phase 1, we'll do that too, however.

    

  I have never in the ten years we've been in business as an agency detailed out the hours by activity.

• The UXD innovation process is a nonlinear spiral of divergent and convergent activities that may repeat over time.
• • What kind of project is it? What are the key points?
  • What should our steps and milestones be in the project?
  • What should our/my deliverables be?
  • How can we/I explain the main idea?
  
  

  I have realized that if I do not answer these questions previous to creating a deliverable, I waste more time and deadlines slip.

  The deliverables are not for us. The deliverables are a means of communication with several people: manager, decision maker, client, designer, front-end developers, back-end developers, etc. Sometimes I have the feeling we overlook this from time to time. After I think about the project I have to ask myself, where will my deliverables and other efforts fit within the process of design? The following diagram describes different lines of work that will lead us to some questions each line must accomplish. Depending on these questions and topics I will outline the basis, basics and deliverables for which each skill and ability which is necessary.

• The facets refer to three characterizing facets in any project: business value, ease of implementation, and user value.

  Faceted Feature Analysis also uses three constraints that govern every project: cost, time, and quality.