In the creative business, I have learned there is often a natural tension between ensuring profitability and ensuring customer satisfaction. Essentially, a project manager or producer will come to a point where a decision like this emerges: Our client expects X but they are only paying for Y. What next? It is likely the client will be unhappy to learn they are expected to pay more money.
So, the answer is to do the work for free, right? Nobody can afford to have unhappy clients. Particularly in this day and age. Everything we do in creative services is becoming a commodity and there are 500 companies chomping at the bit to pick up where we leave off if things don't go well.
On the other hand, if the producer consistently allows scope change after scope change, with little or no consequences, the project will quickly become an expensive hobby. If enough projects are not profitable, the company fails.
When I was a producer, I eventually determined this was really not my decision to make. Frankly, it was not my money on the table. The correct action for the producer is to quantify the delta between what is expected and what is being paid for and then request approval from someone who is authorized to make such decisions.
Now, I am a director, so I am thinking about this pretty carefully. I am also looking at the problem from a new perspective and I am starting to think...There may be another way. I'd really like to avoid the unhappy client altogether, if I can.
The key is to back way up...For starters, why does the client feel shocked to learn more work will mean more money in the first place? What action did we, as a vendor, take or, perhaps more importantly not take, to set up an environment where our project is in a class of transactions which is completely unique...Where time no longer equals money.
I'm convinced this is a result of neglecting to manage expectations. In this case, we have forgotten or decided not to explain what a change in scope is and what it means. If we had explained this up front it is likely reactions would be less, or not at all adverse.
It is critically important to explain these things before they happen, in a calm, relaxed setting. This is why I choose to make it an aspect of the kick-off meeting. During this crucial first interaction with the client the producer should carefully review this subject in detail, so the client knows what to expect.
Then, when the first scope change situation arises, I always recommend it is free, or significantly reduced in price. This does not mean it is not quantified and documented. It is absolutely critical the everyone sees and understands the consequences of introducing new requirements or changing their mind...even if the first time it does not actually sting...
Finally, and most important, communication is the key. If there is regular, consistent communication that includes information about time line and budget, the client is not likely to be surprised about the consequences of their decisions. Oh, and pick up the phone! don't discuss money via email. That's inviting a mess.