Dangers of Ballpark Estimates

I was recently on a call where someone was asking me for ballpark estimates on how much it would cost to develop the software and procure the hardware for some interactive & immersive experiences. At this point in my career, I’m quite confident with that BUT I realized they were likely going to talk to other folks as well! So this post has insights to keep in mind if you’re ever needing to quickly pull some numbers out of a hat!

What are the dangers?

The dangerous of on-the-spot estimates are huge. They can range from reputation at the start of the project to technical disasters at the end of the project. On the beginning side of things, if someone asks you for an estimate on-the-spot and you provide a number that they use to secure a project with a huge famous client, then they later learn the number is wrong and not feasible….that’s bad news for you. They’ll never call you again! They’ll likely tell some folks how you messed up their project by providing the wrong numbers EVEN if they’re the ones that forced you to give them numbers on the call.

Then imagine they don’t find out at the beginning and then they hire you to do the project for that amount of money. You might quickly find out it’s not nearly enough money to do the project. This could mean that you are basically working for very little pay for a long time, or that you’re trying to buy knockoff / cheap hardware to get the project done. This will then make your life miserable while you’re trying to install something with the improper gear. Honestly it only gets worse from here and you can imagine what other kinds of bad things could happen that all started from you providing a ballpark estimate on a call or at a meeting because someone put you on the spot.

Solution?

That previous section sounds either extremely terrifying or super triggering. Either way it’s not good! So what are the solutions? Well I don’t think there’s a single magic bullet that you can use, but there are some good options. They usually which option you pick might depend on what you’re comfortable with or what skill level/experience level you’re at in your career. Let’s dive into them.

Make the estimate!

This might sound crazy, but if the project isn’t very large and doesn’t seem like there are huge stakes, you could try your best! Try your best to think about it quickly, identify the large areas of the project you need to take care of, and then throw out your number. Nothing will make you learn faster than saying the wrong estimates a few times! Especially if these are gigs early in your career that are only for a few thousand bucks, it’s not like you’re losing a TON of time or money. This was the approach I took, but I only recommend it for folks who are ok with handling pressures and stresses that may come along with that. A sub-method of doing this is to inflate your estimates. Even if you’re thinking about numbers quickly, feel free to multiply them by 1.25x or 1.5x to give yourself a buffer. If you don’t end up using the extra buffer, then you’ve done yourself a favour and put more money in your pocket. And if you do need it, thankfully you have it there to prevent potential disasters. Over time you’ll definitely find you get better at this to the point where I can quickly think of a fair estimate for a project while on the phone, but it’s not exactly a fun skill to develop!

Be honest

Not every business skill is some greasy trick, honesty works great a lot of the time! If someone asks you to immediately provide estimates or numbers you aren’t 100% confident in you can say something like:

I appreciate the opportunity to work on this, it sounds like a really cool project, but I’m not 100% confident in providing that kind of number off the top of my head. If you give me a little bit of time to sit down and run those numbers, I can get you some information pretty quickly that will also be much more accurate than something I randomly come up with off the top of my head. How does that sound?

Something even that simple can often get you around the dangers of this and gives you time to run the numbers or ask some friends what you should bill for the project. This is also the ultimate safety, because you’re telling the truth and doing your best, and that’s anyone can ever ask of you. If they don’t like the answer, there’s nothing bad anyone can say about you and you won’t end up in trouble. If you’re newer in the industry or don’t like the stress of giving numbers over the phone, this might be a great option for you.

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Defer to invisible forces

This is a classic business tip I give all our HQ PRO members and anyone who will hear it: defer to invisible forces. What does this mean? Every time someone asks you to make a decision you don’t want to make, tell them that you have to defer to someone else. This could be a team member, a business partner, a pricing spreadsheet/calculator, it doesn’t matter, the important thing is that the decision force isn’t with you right there and then. As long the force isn’t there with you, you basically can’t give them further info. It’s simple, I know, it almost sounds like something out of Home Alone, but it really works. Even if the business partner doesn’t exist or the team members don’t have any input on this topic, it doesn’t matter because there’s no real way for the person on the call to follow up or investigate.

This is a good backup to keep in your pocket in case being honest doesn’t work and the other party keeps insisting, you have another tool in your toolkit.

Wrap up

Whatever method you end up using, just remember that there’s always safety in the option of being honest and telling them you’ll let them know later. If anyone ends up thinking less of you because you didn’t want to think up a budget on-the-spot, then they were the ones being unprofessional and likely aren’t that good at their job. So never worry, never stress, keep a few of these tools in your back pocket and you’ll do great!