I recently presented at WordCamp Asia – the regional conference for WordPress developers – and talked about how to gather and use data to make decisions as a small-to-medium sized web development agency. Over the years, we have made countless spreadsheets and custom apps to help us capture information about our clients, projects, finances and workflow in an effort to make better decisions. 

As we have grown, we’ve transitioned a lot of this work to online software-as-a-service companies that collect and analyze company data for a subscription fee. But a lot of smaller companies aren’t there yet, so I wanted to pass on some of the sheets and techniques that we developed, so hopefully other companies don’t have to reinvent the wheel.

The three main areas I focused on were finances, workflow and estimates. Being in a service industry is hard. We charge for our time. We want to charge clients fairly and keep prices low for them, but if we don’t charge for our time, we can’t pay our employees. So knowing how much to charge, knowing how much work we can do and when, and guessing how long projects will take are some of the most critical tasks in our industry. 

Whenever I present at conferences, I always write a script for myself in the speaker notes. This keeps me from going off on tangents, but it also provides a transcript so that attendees don’t have to take notes or worry about missing something, and anyone who didn’t attend the session isn’t stuck trying to understand the slides with no context. The slide deck – with full speaker notes – is available here.

In the finances section, we figured out:

• How much to charge clients generally (billable hours, profit margin)
• If each individual client is profitable (break even rate, target rate)
• What an hourly rate scale might look like
• Spreadsheet for tracking revenue by client over time
• Spreadsheet for tracking hourly effective rate, break even rate and margin by client

In the workflow section, we talked about:

• Figuring out if we can do the project
• Determining when we can start the work
• Trying to guess when we can finish or how to set deadlines
• Some tips on how to handle overflow

Estimates are probably the hardest part of our work. We have to guess how much work a project will be, often with limited details on what we are actually building. What our developers view as a guess, our clients often take as a promise. The best place to start with estimates is educating your clients on why estimates are actually an estimation, and on the techniques you can use to make sure you get paid fairly for your work while the client stays within their budget.

• Estimates are hard.
• Some projects are not worth taking.
• Look at past builds to help estimate future projects.
• Use templates to help break work down into stories or sprints to improve accuracy.
• For complex projects, add a pain factor to the estimate.

Maybe one day soon AI will guide us on how to set prices, manage workflow and estimate new work. For now, I hope sharing our experiences will help make these challenges a little bit easier for others.