Ah, Fall! Leaves turn colors, puffy snowflakes burst from the sky and vanish—and managers gaze out windows while budgeting spreadsheets languish on screens.

Fellow UX’er Diane Bowen was talking with me about budgeting for UX research this week, which inspired me to write down these thoughts.

There is surprisingly little of practical value about budgeting for UX.

• In 2017 UXmatters published Establishing a UX Budget.
• Arnie Lund’s User Experience Management book has some thoughts on budgeting. I read that maybe ten years ago, and I bet it has aged well.

I’ll add some of my own experience to those pieces.

High level? Plan your spending so it makes sense to you first, and then break it apart like Accounting needs it.

The purposes of the budget

The UX workgroup in question exists in the context of some higher level manager’s profit & loss purview.

The overall budget serves as

• a planning tool
• a tool to set expectations (e.g., you’ll be able to hire 1 employee, but not the 3 you requested)
• and an accountable commitment on spending

That manager needs the budget information from various other managers in the organization in order to negotiate the desired spending with the limits on that spending. It’s a complicated process because it means weighing the needs for each group against the others, and against the ability to pay for those expenses across the budget year—and ideally that spending plan (the budget) coheres with the organization’s strategy.

What does that mean for a UX manager tasked with budgeting for UX?

If nothing else, I’ll suggest that you shouldn’t take it personally if you are asked to revise your proposed budget according to some particular limitation.

How to think about spending for a UX workgroup

In my experience, when I’ve been given the previous year’s spending to help with budgeting for the coming year, it is in the form of a spreadsheet listing the various chart of accounts line items.

E.g., 5590 – Third Party Transaction Fees, and so on. In my mind, Accounting departments are famous for ignoring the heuristic of Match Between the System and the Real World.

In the real world, I think about spending in a few categories that map with my responsibilities.

When I think about user experience, here are a few of the big categories.

1. People
   1. Wages, including raises & bonuses
      1. Remember new hires. Consider interns, too.
      2. You’ll automatically be faced with the utility of a usable, market-matching compensation model.
   2. Payroll taxes (federal & state unemployment, Medicare, Social Security)
   3. Benefits (employer-paid health, 401K contributions, etc.)
   4. Professional development (Think UX conferences, training, books, etc. I budget a dollar amount for each employee, some use it and some don’t.)
   5. Team care. Is your team distributed and you believe an in-person team get-together will be important?
2. Tools for my people
   1. Personal gear, like design software, computers, monitors, desks, etc.
   2. Teamwork tools, like Figma
   3. Shared gear, perhaps hardware for usability testing or supplies for prototyping or for use in design studio sessions
3. Cost of projects
   1. How many research studies? Budget for incentive payments for study participants.
   2. Will you need to pay other research or prototyping costs?
   3. Will employees need to travel for projects?
4. Work overflow
   1. Imagine that your team gets buried under projects and just can’t get it all done. Do you have budget dollars to hire temp staff, contractors, or work with an agency? It’ll look pricey, but not compared to increasing your employee headcount permanently.
      1. Consider the utility of having a good network of UX pros to call upon for work like this.

You should line all this up in a spreadsheet. I tend to have a worksheet just for people costs with a line per staff person I already have and anticipate having, and a separate spreadsheet for the whole picture.

Once you have this clear, you’ll probably be able to imagine how well you are accounting for the real costs of running an effective UX workgroup.

It brings a feeling of satisfaction and accomplishment. You’ve brought order out of chaos. Good job.

The bad news: That was just for you.

Next, imagine that you meet with someone in accounting, or higher up, who says something like, “Wow, that makes so much sense. Great work! I’ll take it from here.”

Personally, I’ve never had that happen.

Why? Because at some point the planned expenses have to be coded to an accounting system, and that accounting system serves a different and jealous god.

That god’s name is the IRS, its rules are GAAP (Generally Accepted Accounting Principles), and its hammer is audits and fines.

In my experience, the IRS doesn’t know much about running a business, but it believes that it does.

One example: As a manager, you know that recognizing, empowering, and developing your people while unifying them together as a powerful, creative team, is one of your jobs. Thus, you think that paying for a team luncheon as you exercise some creative thinking on seeking analogies in the world that shed new light on your team’s tough design project would be a business expense. The IRS by default says it isn’t, insinuates that you are defrauding the government when you buy lunch for your crew on the company’s dime, and requires you to run the gauntlet to prove otherwise.

Now reformulate the budget that makes sense to you into the form that Accounting needs

Bottom line, at some point in the budgeting process, all those well reasoned expenses you’ve mapped have to be deconstructed and remapped to the organization’s chart of accounts.

In my experience, it is worth the effort to map spending in a way that makes sense to you before you have to form it to a chart of accounts. When I’ve started from a chart of accounts, I’ve had in the back of my mind the question of what have I forgotten, because I haven’t applied my own rationale to the problem.

So, to do that, I’ve had the accounting version of budgeting on my screen and my version of budgeting on my screen, and I go through the process of distributing the expenses from my model to the accounting model, making sure I track them all.

Often, I’ve needed to get guidance from people in Accounting to answer questions like, “If I send a few people to a UX conference for the purpose of professional development, how should I account for the registration fees, the transportation costs, the housing costs, and meals?”

Because in my mind it is all just for the purpose of professional development. But that’s nonsense, right?

This process gets easier and faster the more you get to do it.

I hope this helps. Anyone else?

Alright, I imagine the audience for this particular blog post is rather small. But I hope these thoughts help someone.

If you also have experiences like this that you could share for the benefit of UX managers, I encourage you to either comment and share your perspective—or just write up your own work and publish it somewhere.

I’d be glad to create a list of “see also” links here.