Understanding the lifetime value of a project

When calculating the value of a project, consider the lifetime value of a client

Early in my career as a freelancer, I would look back on projects that went way over budget on time, and when eating a large portion of my time I would tell myself  “I’m never doing that again”.  However, on the very next project I would fall back into my old habits of trying to make sure that the customer got what they wanted for their budget.

Many times looking back, I considered this a business error.  After all, how can I make any money if I flush it down the drain by going over budget and eating a large amount of my time on every startup project?  Time and time again on new projects, I would add unnecessary features early in the project, and then late in the project regret it because of the non-billed time I spent in order to close the project out to the client’s satisfaction.

Lately however, I’ve looked back upon my career and a successful application lives on, grows and needs to be nurtured and enhanced.  Some of my biggest failures on the initial project have virtually made my business.  Without giving any numbers in particular, I’ve had several projects that, over the lifetime of the project, have provided revenues of over 70 times the initial project costs.  Now with this comes a great deal of service, but after all, that’s what we sell right?  And unlike the initial project, where there is usually some risk with the client, add-ons after the project is a success are typically a no-brainer.  Adding a report here or a time-saving action there provides immediate quantifiable value, and is usually an easy target for us to stay on budget.

It’s so important to make sure you get to the finish line with relationships intact, even though at the end of it you may be so tired of the project that you want to rip all of your hair out and go be a greeter at Wal-Mart.  I think this is where a lot of freelancers and businesses fail.  At the end, they are so frustrated with the project and client relationship that they are ready to move on to something and someone else, where they swear they will not make the same mistakes.

With a focus on the life of the relationship, it has taken the pressure to avoid eating the cost of some overtime on the initial project off of our chest, and allowed us to focus on the long term goals of the client as if they are our own.  After all, their success is our success and embracing that has made all the difference.