How to create

financial estimates

as a freelancer

The most worthwhile projects are often the ones that can feel overwhelming at the start. Looking at such projects from the freelancer’s perspective can feel that it’s impossible to estimate time and money they will take to deliver.

But from the client perspective, its crucial to know the budget and understand how much they’ll need to invest. That is why accurate financial estimates are super important for freelance work. Both under- and overestimating your workload can risk the success of the project and positive cooperation with the client.

There are two secrets of correct financial estimates: WBS and decomposition.

WBS stands for work-breakdown structure.

Originally developed by US Department of Defense, WBS is now widely used in project management. It’s a visual, hierarchical and deliverable-oriented deconstruction of a project. Each word here is important:

visual – WBS is usually a chart with project objective at the top, then dependencies and sub-dependencies below;
hierarchical – you structure the work in a way that you know which steps happen first, which next and how they depend on each other in order to reach the main goal;
deliverable-oriented – you only put tasks in WBD which have a tangible deliverable and avoid actions for the sake of actions.

WBS will help you understand your project and see the main big goals and deliverables.

2. Task decomposition

It is breaking down complex processes or tasks (that we defined in step 1) into smaller, more manageable parts.

This is when you start to create your estimate and base it on the tasks, defined during decomposition.

You assign each task a realistic time to perform it. Best practice is to make sure each task is not taking longer than one working day (8 hours). It needs to be very clear how you will do it and if it takes “around a couple of days” – then it’s not good and you need to decompose further.
Now that you know all the step-by-step actions required for a project, you can estimate the budget based on required hours.

*Do not forget to allocate additional time (somewhere around 20%) for revisions.

At our agency, we usually have two financial estimates.

Pre-sale estimates may include time to investigate if there is unknown part of the project that requires us to look into it further. Then after all the unknown parts were investigated and figured out, we send clients a more detailed estimate before each contract.

Thanks to this process, our estimates of utmost accuracy and clients don’t end up at the middle of the project done with all their budget already spent.