Planning the upcoming budget for a specific website project or for the next financial year is not always a straightforward process. Coming up with figures can feel like something between an inexact science, a complete stab in the dark and a balancing act.

One of the main reasons for this is that teams are often put in a position where they need to make the business case or seek approval for a budget, but they don’t have the precise requirements for their project. They also can’t fully predict other things they might need to spend money on either in a project or in the coming a year. Planning a budget can also have an element of the “dark arts” as teams plan a budget which cleverly utilises different available “pots” of money in creative ways.

The budget planning process can be time-consuming and frustrating. In this post we’re going to explore a few tips that just make it that little bit easier.

Partner with your agency

Your digital agency should be able to provide important input into the costs of any plans you have for your project or for the upcoming year. We’re frequently asked to provide estimates or “ballpark” figures for our clients to help determine a budget figure. These are often based on extremely high-level requirements, so any costs are estimates at best and realistically we may only be able to provide a budget range. However, when we’ve worked with a client for a number of years, we’ll also get a better feel for what can be achieved, and the kind of costs that are appropriate.

Some agencies can be reluctant to provide these kind of ‘guestimates’ as some customers can misunderstand them as quotes. We pride ourselves in our strong client relationships and honest conversations, so we are always happy to help, but we will emphasise the caveats and limitations of any numbers we provide.

There may also be other budgeting options that your agency might offer too. For example, moving to a more iterative pattern of development at regular intervals based on a pre-agreed budget provides certainty around spending and can also reduce development costs compared to a more traditional project approach.

Pay for a scoping exercise

Sometimes to provide accurate costs – particular for a specific project where the requirements are more defined – we will need to undertake a proper scoping exercise to investigate feasibility and options. Paying for a smaller scoping project that can then define more accurate costs as well as a preferred technology path will not only allow for much better budget planning, but also will help to plan the detail around the project and the related build.

Feedback from customers when we’ve undertaken these kind of scoping exercises has been overwhelmingly positive, so this might be an option to discuss with your agency.

Review your costs from the previous year

It might sound obvious but the record of your actual spending from previous years can be a major data input into your budget planning, giving you a realistic record of how much it cost to make a certain change, the level of unexpected costs that came up, what contingency (if any) was left in the budget pot and so on.

Your ability to leverage this approach will depend on the state of the information you’ve kept, but it should give you some clues to the spreads of your costs and any other patterns. It can also help you to see if your budget estimates feel right and aligns with previous years.

Consider all the sources of expenditure

The majority of your costs are likely to be fairly straightforward to determine, although you may need to check with vendors if there are any upcoming price hikes. Regular ongoing costs may cover:

• Any licensing costs for your products (CMS or DXP, analytics, social media platform etc.)
• Hosting costs (if applicable)
• Support and maintenance contract
• Any ongoing resourcing if you use external recruitment
• Any other subscriptions, for example to an image library.

But then it’s also important to consider the other costs that could arise, including:

• specialist advice on topics such as SEO, search or security
• custom development
• content creation
• change management
• photography
• external testing / penetration testing
• any required training
• cookie management
• brand assets
• strategic advice
• and so on.

We’re sure there’s a few areas we’ve missed out!

Check in with other stakeholders

Sometimes costs can be driven by regulatory, security and technical changes. Perhaps there is a new data privacy requirement caused by legislation, compliance and reporting that might require a change to how you manage your data, or how you collect personal data from customers. Perhaps there are new technical or security issues or changes to your hosting that require configuration changes to your CMS and DXP.

When planning your budget its worth speaking to other internal teams including your IT and risk-related functions to make sure there is nothing upcoming that might require additional investment in your digital channels and solutions.

Always include contingency

You never know what is going to happen. Always include some contingency to cover unexpected costs. There are a number of different views on how much contingency you need to set aside for a digital project – these range from 5% to 25%. Meeting in the middle would suggest a figure of around 10% to 12% would be a sensible figure for contingency.

Expect your budget to be cut, but don’t forget use it or lose it

Sometimes budgeting planning and the related approval process involves a series of cuts. Your initial budget request can be whittled down, based on trading conditions, competing budgets and the constant pressure to “do more with less.” This is something we hear about happening often with digital teams at legal firm clients where an initial figure gets refined, and then refined again. And possibly even refined again.

Many teams approach their budgeting process with this specifically in mind and add “nice to have” line items, so they have things that can be cut without too much fundamental damage to your plans and roadmap. The people approving budgets will also be very aware of this, so finalising the budget can even turn into a bit of a game of cat and mouse.

At the same time, submitting an over inflated budget can sometimes be counterproductive, not only in undermining the credibility around genuine budget requests, but also falling in to the “use it or lose it” trap. If you’re lucky enough to have a healthy budget passed, if you then don’t spend it, you then lose the money. That’s not a problem per se, but it can also impact the following year’s budget, and the likelihood of it being cut, based on the idea that you presented an overinflated budget previously.

The art of budgeting

Budgeting can take a lot of effort and guess work, but its important. We hope you found these tips useful. If you want to discuss your budget or costs for a potential project, then get in touch!