Budgets – the cornerstone every digital product since cave men asked “how much to make ME a fire”?
“Budgets” are an investment by a company to improve its people and its performance. A budget isn’t the reason any product exists. But, like a tree falling in the woods, does a product without a budget exist?
The 400-pound gorilla in the room next to the bear of Time and the eagle of Scope.
(note: I’m referencing “digital products” such as website, web application (PWA, SPA, JAM-stack, PeAnUt-BuTtEr-Stack, etc.), mobile application, etc. but augmentations of existing systems such as upgrading the middleware of an archaic system as a “digital project”)
What’s your budget?
I don’t have a budget for my digital product
Everyone and everything has a budget – even people. You just don’t KNOW your budget.
Here’s a way to tell. Ask yourself, “Am I willing to spend a hundred-million dollars on this product?”
Now you have a budget. It’s more than a dollar. Less than… your limits. If it weren’t, there’d be no reason to meet. So what’s your budget?
Can you tell me what my budget for my digital product should be?
Sure! I could breakdown a 400-page features and functionality spreadsheet into isolated components and give best-guess estimates as to Level of Effort (“LoE”). I could put my thumb out and eye-ball it.
But should I really do that if your budget ends up being less than a bottle of Fiji at the airport (which – as of this writing – is SIX-FRICKIN’ DOLLARS!)?
What about other digital products that are similar?
Ah, historical pricing! Well, having discussed, discovered, designed, delivered and, somewhere in between, developed digital doo-dads for over 15 years, I have noticed a pattern to product size. I would lean back and look at your product and say, “Reminds me of the time I delivered a marketing website for this pharma-tech company…”
But you’re not them. They had a million changes (which is why God invented the “Change Work Orders”), didn’t follow the process, and were late on all their dependencies. They hadn’t budgeted to who they were.
Your decisions, your personality, your mindset… all impact the budget.
I’m part of the budget?
Part of the effort of estimating is knowing if you’ve ever been in a boat before.
Your budget isn’t based on how much money you have (or capital you control) – it’s about what you’re willing to spend for the return on a product – its true value. Which comes from your risk assessment.
Here’s a little secret to budgets: they cost less than the value of what you think you’ll get for them. If you believe your idea cannot return a value higher than your budget, then I would seriously question how you mix your Big Gulp (which – as of this writing – costs SIX-FRICKIN’ DOLLARS!).
Note the key words of “you” and “believe” – all products (nay all businesses) are a hypothesis – that’s why it’s called Computer Science and not Computer Art.
“Budget” is “Cost” as clothing fit for an emperor. Budgets make it sound like you’re guaranteed something. If you can reframe to think “what is my cost for this project?” then whole new possibilities open up, such as “How can I keep my cost down?”, “How do I control my costs?” “Where are my costs coming from?”
How do I keep my budget – I mean cost – for the product down?
Ding Ding Ding – your costs are the people delivering the work – everything that blocks their Flow.
We are masters of flow. Harmony guides our team. Disharmony, such as fear of the future – like AI or Blockchain – shakes fist – slow our flow. Not providing decisions, or copy, blocks our flow.
Budgets are the gas in the tank – if you don’t want to crash land on an island, have enough budget to land.
Why is this so hard to determine my digital product’s budget, cost, whatever?
That’s easy: budgets gets mixed in with value. It’s the big, scary brother to the sibling of Time and Scope.
Digital products have significant value but there’s a quantum-ness to it… Both value-less and infinitely valuable by their very nature – network effects, novelty, augmentation of individuals time, infinite regenerability, and more. It’s why we love them – we get a lot of fun (and strange) experiences from blinky-lights.
Another reason they’re hard is there are so many kinds of digital products: from out-of-the-box marketing sites to custom mobile applications to a middleware that notifies you your coffee is ready.
The risk of being off on your budget is needing even more budget, or losing the engagement.
But how do you do it? How do you come up with a digital product budget, I mean, cost?
Estimating Budgets is both an art and a science.
5 Budget Art Techniques
Phase Budgeting – such as Discovery, Design, and Development is the safest way to constrain your costs – work on one phase at a reduced amount, then re-asses your next budget
Team Budgeting – budget to the team’s time by their market rate
Historical Budgeting – compare your budget to previous digital product engagements, like content management systems or digital media ads (adjust for inflation)
- Story-time: for one media client, we were able to put a budget pricing sheet for individual components that their sales team could then present to customers and provide us not only with the budget to a product but also the scope and time as well! Saved both of us a lot of cost in budgeting
Zoom Out – get a reality check for your budget based on the market
Feature Budgeting – Budget to a feature… but that works for “the city writ small”.
How accurate is my digital product’s budget?
It gets more accurate by phase (Discovery, Design, Development, etc.) By the end of an engagement, you’ll know what your true budget is.
Gather your requirements; recognize the constraints – it may be worth to spend minor budget to do a technical deep-dive on a product and come out with a clearer vision of your budget.
The time to complete exercises on any size of digital product is, after all these years, what matters the most to budgets.
Time, as in people, affect the digital product budget?
People. Smart, beautiful people.
Joyful designers. Clever developers. The savvy product manager. A wise (if somewhat mercurial) manager. Consider their time, their cost, and then budget how long they need to do their jobs.
I would rather have another hour than another dollar with them, so rates may fluctuate.
Where they work affect the budget! From developers in Seattle to designers in India to your cousin’s nephew living on your couch who just finished a crash boot-camp programming course in React, they all have a cost.
If I pick the right team, I can find the digital product budget
Time to build, based on the wage of team members (their cost) as well as management to orchestrate them, is the closest to creating an approximate budget.
The market determines the relative cost of individuals, what they’re willing to work for income, and the speed with which they work is then how a digital product’s pricing can be most straight-forwardedly be determined.
As long as everyone’s estimates are accurate…????
