(Financial) transparency builds trust.
Why, then, many companies turn and run the other way when it comes to sharing the project budget with partners and collaborators – software development or team extension service providers?
The primary worry is losing the leverage in negotiations and getting overcharged. However, professional entrepreneurs, negotiation experts, and researchers unanimously agree that not sharing the numbers prolongs the bid process, creates frustration, and prevents buyers from getting what they want. On the other hand, keeping the project budget (and its dynamics) known to all parties is an advantageous decision. Let’s discuss the benefits in more detail.
1. A valuable shortlist
Cost risks are common threats to the project timeline, but keeping your financial capabilities undisclosed can even make it more vulnerable. In fact, the earlier you decide to open up about the available budget, the better.
For starters, it is good to reflect whether your financial capacity is larger than the extent of the project. The Performance Based Studies Research Group from Arizona State University pointed out that in 95% of cases, the budget rarely exceeds the scope. Truth is, you will need to refocus and recalculate your original plan. But you can make it less complicated by sharing the budget information at the shortlisting phase.
Low-performing agencies will always submit wallet-friendly initial offers, making high performers look unattractive. However, accomplished agencies can apply your budget details to draft more customized proposals. They might not be the cheapest or all-encompassing but will highlight multiple possibilities and even innovative alternatives. This way, you can elevate your shortlist from the catalog of vendors to a selection of insights.
Choosing a partner based on the pitches made without assessing financial capabilities might result in shaking hands with someone who will undercharge and, consequently, underdeliver.
2. Scope creep prevention
In project management, scope creep is an uncontrolled growth of the project’s scope (for example, multiplication of a single deliverable), resulting in time, cost, or resource inefficiencies. It is one of the most common reasons why projects run over calculations or deliver late.
The lack of transparency over budget strongly influences a set of discrepancies causing this undesired phenomenon, namely:
- Lack of stakeholder agreement
- Poor prioritization
- Frequent change requests
Tell your agency how much you can invest. It helps all stakeholders stay on the same page by establishing a unified vision of all the parameters and their value. Once everyone is aware of what’s what, it is easy to prioritize components critical for delivering a usable end product instead of holding on to feeble discussions. Additionally, your budget information can help the agency provide better advice regarding change requests, and whether they are worth the expense in the long run.
3. Cost savings and higher ROI
Sharing the budget with your agency can bring considerable cost savings, boost ROI, or both. This happens because financially transparent collaboration shifts the conversation from feature to result-oriented.
For example, if you are looking for a website revamp on a tight budget, instead of developing a bespoke online presence, a web design agency can suggest working on the most value-generating features or having an existing template customised for your requirements. Let’s say you planned a full website rework, but in the end agreed on UX adjustments to the eshop landing pages. It resulted in more traffic, higher sales, and lower cart abandonment rate.
No matter who your partner is – a professional employer organization or a software development company – leting the team know how much time (therefore, money) they can spend working on a feature empowers better planning. The agency can regularly monitor whether they are on or off track, and adjust their efforts accordingly.
4. Our approach
Neurony’s own product development process is a set of work procedures and stages to always keep the customers up to date. Knowing how much you are ready to invest plays an important role in the beginning of our collaboration.
We start by defining a minimal viable product and move onto product discovery. At this point, the deliverables include the general idea about your project and an estimated budget interval. These numbers are not cut and dry – your input influences their accuracy. Whether it’s $2,000 or $20,000, your budget information allows us to bind everything to clear evaluation criteria. This way, we can propose viable solutions designed with an affordable tech stack.
In the end, “To share or not to share” should not be the question. Financial transparency with your partners is an opportunity, not a risk. Budget-aware collaborations yield the best possible results with the money that you are able to invest.