People who hire you to compose or perform music or to provide other sound-related services often lack understanding of some basic realities. This is usually why they're hiring you to do the job: they don't have a clue about it, so they get a professional. Smart move. Sometimes a client's cluelessness is caused by inexperience. The worst cases, however, are those who are willfully ignorant, choosing neither to learn nor to make decisions.
Regardless of the reason for their ignorance, I consider it a part of a professional job to inform clients of trade-offs and issues affecting their project. Unlike some consultants who maintain a veil of secrecy over their work to "preserve job security," I keep my clients informed, because I believe that gives them more confidence in my reports and in their decisions. As a result, clients are easier to work with, and we are more likely to build an ongoing relationship.
So how does one break the news that a project requires more time or money to be successfully realized-or worse, that there is a problem (such as their poor source material) that will unavoidably force some compromise in their goals? It's not easy, but it has to be done.
A classical musician who was a client of a friend of mine had had a CD made from a cassette dub of a digital recording, and he didn't understand why it sounded so much worse than the original. Explanations about noise and frequency response elicited only a glazed look.
In such a situation, the most effective way to communicate the idea is to simplify to the basics, making your best effort to maintain accuracy: "Cassette recordings don't sound as good as digital recordings." Some may call this a dumbed-down explanation, but if it is true and makes the point clear, it is useful nonetheless.
When you must tell a client that the project will require more time or money to complete, it gets rougher. For example, making audio files into a CD takes much more time than writing the actual CD, but many clients can't understand why it requires several hours to do what they want.
It's not unusual to have your honesty rewarded with the loss of a client to a cheaper bidder. That's not to say that the cost of the project, in the end, will be any less than your original quote; it will probably be more. Nor can you ascribe such a loss simply to a client being "cheap"; after all, we all want to pay as little as we can get away with. But a client who goes with the lowest bid will frequently be unhappy with the results, and is likely to consider the honest, accurate bidder next time they have a project.
I had to deal with a worst-case situation recently, when I had to call a client to tell him that the master of his album, along with the safeties I had just made but not yet delivered, were among the missing items after a burglary. Ouch. In that case, there was nothing I could do but make the call as soon as I found the DATs were gone.
In general, being straight with clients enables me to avoid a lot of "unfortunate misunderstandings" while it simultaneously enforces their feelings that they got what they expected and paid for (if not more).
Finally, there's the Golden Rule or "what goes around comes around" aspect. The first-time video maker who gets good treatment from you on a soundtrack may be more inclined to shoot your band's first music video when he or she has become an established director, just as you'll do an extra nice demo mix for the plumber who came out early one Sunday morning to fix the flood in your basement.
The world is complicated, and sometimes it's not clear whether honesty is always the best policy. But being honest with clients goes a long way toward keeping you from encountering the Minotaur that often lurks in the labyrinth of project management.