We explain how to make a professional budget capable of convincing your clients. We tell you from the criteria to consider setting the prices appropriate to your product or service to the basic data you must include, how to detail the concept and other tips and recommendations that you must consider when making your budgets.
The budget is, in addition, the letter of presentation of every professional and is, on many occasions, the first contact with a client, so it is a tool that must be used with care since incorrect use can be decisive to make us lose a possible buyer or user.
While it is true that the price is often a determining factor in the decision of the user, a budget can add value to our product or service since it allows us to show our expertise or implement different marketing techniques to make our offer more attractive to the customer.
When a professional thinks about making a budget, he should try to balance the total expenses, the hours of work and resources consumed, and the profit margin that he wants to obtain.
Making the right budget for each project or client can be an art, but always from transparency and common sense.
Criteria to fix prices in your budget
The fixing of prices is a subject for another article since it depends on various factors, criteria, and casuistry. However, given its importance when making a budget, we have included these basic criteria at the guidance level:
Cover costs: many freelancers and freelance professionals must first analyze what is the hour price to pass on their work based on their fixed and variable costs and the distribution of their work time.
Profit margin: on the cost of the work, the self-employed will define a percentage of business profit. Its amount will depend on the client’s commercial strategy and whether the costs are low enough to allow it.
Market price: it is important to have references to the prices of the competition and how far the customers are willing to go, both above and below.
Promotions: the self-employed must evaluate the inclusion or not of possible promotions to make their offer more attractive.
There are two common mistakes that you must try to avoid when setting prices:
- A price too low devalues the value of your work, your product, or your service, in addition to running the risk of not covering costs. Also, if you start with prices too low, it will be more complicated to increase them to get a real benefit.
- A price that is too high or too much above the average market price or the added value that your product or service can offer can make you lose a client before, even, starting a negotiation. If you choose to move in a high price range above the average of your competitors, be sure to justify that price increase adequately or provide an added value that balances the quality/price ratio.
What should a budget include?
A budget must be clear, concise, and detailed. There are several techniques to write a budget. Still, whichever option you choose, the most advisable is that details to the maximum every one of the elements that constitute in service, so that the client knows exactly what he is paying.
There are a series of basic elements that every budget should include:
Data of the company/service provider:
In this section, you should detail the details of the company or professional providing the service, such as the name or business name, the NIF or CIF, the tax address, and other contact information, such as telephone and/or email.
The budget should reflect the client’s name (either private or company), as well as his CIF or DNI and the address.
In this section, we must include the number of units of each element that makes up the concept, the unit cost of each of them, and the total cost of each group of units of the same nature.
The amount must be broken down indicating the tax base, that is, the sum of the concepts without VAT, the percentage of VAT applied, and the total amount of the budget, which results from the sum of the tax base plus VAT.
It is crucial to study the payment method of each budget. Typically, when the amount is not high or does not require prior material acquisition, advances are not usually established. But in the case of a large amount budget or that involves a significant acquisition of material or contracting services from third parties, it is advisable to agree on the advancement of a percentage of the total amount.
In this section, you can also specify the means of payment, either by bank transfer or deposit or in cash.
Other elements of the budget
In addition to the mandatory elements described above, several techniques can help us make our budget more attractive and generate greater confidence in our clients.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.