I mentioned before that when starting your own company you end up wearing a lot of different hats. I thought I would talk about one of the hats that is very important, and that is my bidding hat.
Bidding is the process of looking at the work a client needs to get done, and giving a price to them that you are willing to do it for. Seems pretty simple, but it actually is very difficult. If everyone was willing to pay a fair price for the work then maybe it be simpler, but the truth is everyone wants it cheaper, faster, and better. So you have to be creative to find other ways to make your bid work with your clients goals.
In an ideal world we would be able to get what we want immediately, in perfect condition, and for free. Unfortunately the real world of business does not operate this way. Have you ever heard of the project triangle? It is a simplified way to show how things work in the graphic design industry, but also holds true for many other industries. It shows how at best you can expect to have two of the properties, but not all 3. For example you can have it fast & good, but that will be more expensive. Or you can have it good & cheap, but it won’t be done very fast.
This approach makes it seem very straight forward, but this is only a part of the bidding process. I work with very creative people every day, and as the “business guy” I’m often not looked at as a creative person. Which seems to make sense since I’m not the one creating the artwork. I still feel that it takes a lot of creativity to run the business. Sure there are those administrative duties that don’t take a lot of creativity, but there are also a lot of decisions I make on a daily basis that does require creative thinking.
Not every bid is the same, and you often have to think outside the box to craft an agreement with your client that creates a win win for both of you. You can agree on a set amount for the entire project, or you can set it up on a day rate with no limit. It all comes down to what both parties are comfortable with. I have seen some bids that work on a day rate, but it is capped at a certain point. For example they will say that the project won’t cost more then $2,000, but they will only charge for the actual work done. They might have a day rate of $100/day, and if it takes 10 days it will only cost the client $1,000. On the other hand if it ends up taking 30 days the client will only pay $2,000, and the animation company will loose $1,000 worth of potential pay. This is one reason why bidding is so important.
If you bid to high then you might not get the project, but if you bid to low you risk loosing money. If you are working alone you only loose time and potential income, but if you are a business and hiring people to do the work your risk is greater. Lets say I have 3 artists that I pay $100/day, but in order to close the deal with the client I bid the whole project at $2,000. If it takes my artist less then 6 days I will actually make money, but if it is over 7 days I will be losing money. If the projects goes for 10 days I will end up paying my artists $3,000, and will have lost $1,000 on the project.
As you can see the limitlessness of designing these deals with clients has a great deal of creative freedom. Trying to craft a deal that will get your client to agree with, and will also be beneficial to your business requires a great deal of creativity. This is also why bidding is one thing I often worry about, because if done incorrectly it can cost you a great deal.
This is not only an art companies should master, but also for anyone who needs to negotiate for anything. Whether it be talking to your boss about a raise, or when buying a car from a salesperson you need to be skilled at this art.
I’m still learning the art of bidding, but here are some tips I would give to someone starting out. Get as much information as you can from the client, so that you can give the most accurate bid possible. Also try and build in some safety nets. For example you can include a limited amount of notes, and anything over that will increase your bid. Or you can make it very clear that any additional work added to what was previously agreed upon will increase the bid. Work with your team to double check your thinking. You don’t want to miss a small detail that can cost you a great deal. It is not all about money. If you really want to work on a project because it would look great on your demo reel then offer to do it for less, but make sure you get them to agree to letting you use the work in your portfolio. Think outside the box, and be creative when making a bid. It can be a scary world out there, but if you are smart about it then it won’t seem as frightening. Like with any art form, it requires skill and a great deal of practice to get good at it. Don’t give up, and continue to fine tune your skills. Don’t be afraid to step away from the traditional way of doing something, and taking a risk by being different.
“When I’m old and dying, I plan to look back on my life and say ‘wow, that was an adventure,’ not ‘wow, I sure felt safe.’ ” —Tom Preston-Werner, Github co-founder
Best of luck to anyone that is out there bidding on projects, or negotiating pay for their time and services. Please share your experiences in the comments below. I would love to hear about both bid successes, and biding disasters.
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