Hi there, fellow traveler, freelancer, solopreneur or entrepreneur at the beginning of your journey. Since I’ve tried to create a self explanatory title and stayed away from misleading wording, I hope you are here driven by a very specific need: to get the cost estimate template.
A sort of personal foreword
First things first, I want to set expectations straight:
1. Free cost estimate template
I promised you a free cost estimate template . You will find the link to the Google Sheet at the end of the article. If you’re in a hurry, you can scroll straight down. But, since it is a complicated-ish matter, I highly recommend you read the article as well. Or at least browse it. It’s not a motivational piece though we have some of those too. They’re in the resources section and usually feature pretty pictures or illustration. This piece is a very practical one.
2. Not asking for your e-mail
I know that the best practices to growth hack your startup say that I should actually ask for your email to unlock this kind of articles, tools and templates. However, right now I am focusing on delivering value and actually trying to help you as much as I can. I am not saying that one day I will not do this [free resource for your email address], because I’d probably lie, but today is not that day.
3. The newsletter
Even if this template will remain free to access I recommend you sign up to our weekly newsletter. There’s more good info coming. No spam, promise. I hate spam. A LOT. You’ll only receive 1 email per week maximum, with relevant info only that will hopefully help you grow as a freelancer or solo/entrepreneur. Also, your feedback is incredibly valuable so don’t hold back. You can always get in touch with me at claudiu (dot) jojatu (at) gmail (dot) com.
4. Free articles are not free
These articles cost us a lot. Before diving into the article let me just tell you approximately what it means financially for me personally: I went through the exercise we’ll be discussing in this article myself. I went through the spreadsheets, I have my own personalized version of the cost estimate template. The exercise revealed that my hourly fee is 50$.
Making the template took me 3.5 hours. Writing this article took me another 3 hours. That is 325$. Then, in order for this article to get to you, I had to post it on Facebook, Instagram, Twitter and LinkedIn. Another 30 minutes. Then I have to create some A/B testing audiences and spend a certain budget on Facebook. Another hour + 100-200$ in ads. That means that an article like this can end up costing me around 600$. An average would be 400$. I am doing this for free, without asking for email addresses or donations. It’s my way of supporting those in search for independence. But, if you like the content on our platform, a share or a recommendation is always incredibly welcome.
Let’s begin decoding the cost estimate template
I will try to keep this article to the point and as easy to follow as possible. I don’t want to waste you and I more time that I already did. 🙂
I hope you’ve already established you skills, how you can monetize them and what services you can offer your clients. If you have a very specialized niche, that’s awesome. Things should be clear. If you are a kind of “jack of all trades”, that’s awesome too, but I’d recommend you pay extra attention to the second sheet of the template.
Cost estimate vs invoice
Very important: a cost estimate is not the same thing with an invoice. That’s why the number of cost estimate you send is not the same as the invoices you send. Some cost estimate will be accepted by the client or potential client, and others will be not. Hence the difference. Bottom line: cost estimate = the cost you propose to your client for the project/as fee. Invoice = the amount you and your client settle on and you will definitely cash in.
How you bill
First thing you should do, before sending anymore cost estimate is to have a clear understanding of how you bill.
For services there are basically two important ways:
1. Bill by fee per hour X number of hours. Here you have to keep a very strict project timesheet and report to the client.
2. Bill by deliverables / project. Here, no matter how much you work, you will be paid the same amount. Be careful to know exactly what the client expects from you and what are the deliverables. And try to estimate as realistically as possible how much time it will take you to complete the project. Basically it is still kind of a hourly based payment, but it gives you and the client a bit of predictability.
Setting your hourly fee
To set your fee per hour I recommend you start from your monthly income expectations. If you have more employees this situation gets a bit more complicated, because the overheads are bigger and the financial modeling has to be a bit more complex. But the good news is, as a freelancer or an entrepreneur with a couple of employees, things are a bit easier.
What you have to do is to sum up your fixed expenses (house, car, utilities, office, cleaning, gas, food, advertising). Then you have to set the number of hours you want to work each month. Maybe at the beginning you’ll want to work more, like 10–12 hours per day. But as your client base and notoriety grows, maybe you’ll want to work fewer hours. So, number of hours you want to work each day, multiplied by the number of days you want to work each month. That gives you the monthly number of hours. By which I recommend you to add somewhere around 25–30% overheads (sick days, lazy days, holidays and non-billable meetings, sales and promo).
Now you have the monthly number of hours which you will split to the monthly income. And tadaaaa! Now you have your hourly fee that you can use in your cost estimate template.
The actual cost estimate template for each client
Moving on to the actual template, I recommend you to always fill in the client’s name, project description and client contact info. Why? Simple. Because now, as you are at the beginning of your journey things look simple and you think you will remember things. Well, your memory sucks. All our memories suck. Write them down and feel free to add more info if you think it’s necessary. Make sure that if you get back to your Cost Estimate list, five years from now, you’ll be able to remember what the project was all about, who was your client and how you can contact him again.
When you fill in the cost estimate template tasks you should try to be as specific as possible. Remember, a contract or any other paperwork you do, you put it together when your relationship with the client is very good (so you will tend to be a bit lighter on the important matters). But paperwork is needed precisely for when the honeymoon has passed and your relationship is no longer rainbows and sunshine. Be specific and detailed and this, I guarantee you. will save you a lot of trouble later.
One last thing. I highly recommend you take advantage of the sheet called “billing”. If you use it right (fill in all the cells regularly ), it will help you understand where you are in terms of sales vs. closing deals. You will see how many cost estimate you send and how many of them convert to actual paying customers. You will also be able to see the difference between forecasted income, cost estimate level income and reality. Bonus points, you will be able to see very fast all the invoices that were paid, or the ones that are not yet paid.
That’s it, use the cost estimate template well!
Hope this helps you as much as it’s helped me. And I give you this because it took 6 months to get here. I want you to be able to start your gig way faster than I could and cut you some slack on things that tend to appear irrelevant but I tell you, they are uber important. My gift to you is in fact not a cost estimate template, it is time.
It is a view only Google Spreadsheets document. To use and edit it you can either make a copy in your Google Drive or download it locally. I recommend you try to keep this kind of documents somewhere in cloud, in case something happens to your local drive.
As far as feedback is concerned it is most welcomed to help me improve the template.
If you need a hand, drop me a comment here and once a week I will answer all the questions. Or you can join our group: FCK.WORK | NO.MAD TALKS and ask there. If it is uber important, send me an email (you have it in the first paragraph) and use the title “!!! Help needed regarding the CE Template” so I’d be able to see it and answer faster.