Welcome back to our special Project Management Roadmap series. Over the past two weeks, you’ve learned about project scope and how to schedule a project. Here in Week 3, I’m going to discuss not only how to price a project, but I’m also going to encourage you to think about cost in a number of different ways.
Every Decision You Make Has a Cost
That may sound a bit extreme, but it’s true. Every decision you make has a cost associated with it — the “opportunity cost.” In short, opportunity cost is the value of whatever you give up when you have to make a choice based on limited resources. In your case, as a freelancer, that limited resource is often your available time.
My goal here is to get you to think about opportunity cost when confronted with a new project. If you can do that, then you’re more likely to allocate a scarce resource — your time — more efficiently.
If we go back to our discussion on block scheduling, I talked about the importance of setting aside blocks of time for the activities that help build your business. Let’s say you’re presented with the opportunity to take on a large project at a very good rate. The only catch is that you have to meet some pretty aggressive deadlines that will require you to eliminate some self-marketing blocks from your schedule.
While this choice may be acceptable for a short project, the opportunity cost rises the longer it goes on. This is especially true if you start giving up those activities that help to build your pipeline and grow your business.
When I first started freelance writing, I took on several jobs ghostwriting technical articles for a website development company. Since it was a work-for-hire situation, the pay was not good and really not worth the time I was putting into each project. But I didn’t have any other work, it helped me build a portfolio, and it got me a testimonial, so the opportunity cost was low relative to the value I received. As I began to get more work on my own, the opportunity cost of giving up four to eight hours of my freelance time to an agency rose dramatically.
What is Your Time Worth?