Agency estimating software: price work right

Agency estimating software helps an agency price a piece of work before it wins it, then keeps that estimate after the client says yes, so the hours logged can be compared with the hours sold. Most tools can send an estimate. Fewer turn it into the project's budget, and that is the part that makes the next estimate better.

How to estimate agency work

The method is the same in any tool.

1. Break the work down. List the deliverables, then the tasks behind each one.
2. Estimate hours by role. Design, development, copy, account management. Include meetings and reviews; they are always forgotten.
3. Price the hours. Multiply each role's hours by its rate.
4. Add for unknowns. Ten to twenty percent for familiar work, more for a kind of project you have not done before.
5. Check against history. Compare with what the last similar project actually took, not what it was sold for.
6. Set the payment terms. A deposit on acceptance, the rest on milestones or dates.
7. Write the exclusions. What is not included is as important as what is. The scope of work template has a list.

Price from the hours, not from the client's budget. If the client cannot pay the total, cut the scope, not the rate.

Estimating retainers

A retainer is an estimate of a normal month. Estimate the hours a typical month takes, price them, and add a margin for the small requests every retainer attracts. Then decide what the fee includes, hours or deliverables, and what happens to unused hours. The retainer management guide goes through it.

What agency estimating software should do

• Line items from a price list. Services and rates saved once and picked into each estimate.
• Mixed billing. One-off lines, monthly lines for a retainer, and hourly lines, on one document.
• Payment terms. Split the one-off total into a deposit and later payments.
• Online acceptance. The client accepts or declines from a link, with their name on record.
• Estimate becomes budget. On acceptance, the project opens with the estimate as its budget and hours sold.
• Estimate becomes invoices. The deposit invoice and later payments are set up without retyping.
• Changes as their own quote. Extra work agreed later is priced and accepted separately.
• Estimate against actuals. Hours logged against hours sold, visible while the project runs.

The last point is the reason to buy software at all. A spreadsheet can price work. It cannot tell you in week three that the project is already at eighty percent of its hours.

How Spodus does it

In Spodus, an estimate is a quote. Each line has a billing type: one-time, monthly, quarterly, yearly or per hour, so a project and its retainer can go on one quote. Lines can come from your saved services, with your tax rates. Payment terms split the one-time total into parts due on acceptance, on a date or on a milestone. The client opens the quote from an email and accepts it by typing their name, or declines it with a reason.

On acceptance, Spodus can open a project with the quote's one-time total as its budget, draft the deposit invoice, create a milestone for each later payment and start a contract for the recurring lines. The project shows hours logged against hours sold, its budget and its margin, and turns amber as it nears either limit. Extra work goes on a change quote that the client accepts before it is billed.

Whatever tool drafts the numbers, check the hours against what similar projects really took before you send. See Spodus for agencies, or read agency billing software for what happens after the yes.