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5 Tips for Charging Clients for Services

by Bill Dotson

on September 3, 2009

in Articles

So you have a new prospect for your services and its time to figure out what the price should be. It’s easy to choose to bill by the hour – that’s the easy way out but it is often the wrong way. Billing by the hour is a good way to get yourself into a conversation with your prospect about how long it should take to get something done and since most of your clients aren’t designers, they likely won’t know what the work entails.

Create a Menu and Scrap Hourly Billing Practices

As a buyer, I prefer a flat fee. It only matter how many hours are spent so I can factor an expected completion date into my project. Whether it takes a designer 4 hours or 50 hours, I’m just looking for a flat number to get the thing done. I’m buying the end product, not your time.

I suggest developing a menu for your clients – so they know if they need a logo, it’ll cost $X; if they need a web site designed with a custom front page and layout for interior pages its $y; and so forth.

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This helps me because I know the approximate cost for any project using outside (contract) designers.

New Clients Should Pay Full or Higher Rates

When working with brand new clients, I’ve observed companies charging lower rates – often to win the business. Guess what? The new client is the one with the highest risk. There are a number of things that could go wrong with a new client – you don’t know their culture, expectations, and experience with earlier contractors, etc.

Always Add a Retainer Option in any Proposal

Any proposal offered to a prospect should contain certain elements. You can view a sample sales proposal over at my site. Always add in an option for ongoing work. You know you’d like the work and the client would like to be able to call on you as needed. If you add in a fixed-price retainer for a year with auto-renewal and no opportunity to roll over the time, then you get bonus points for being a savvy business person.

Tie Your Payments to Milestones with Specific Deliverables

This tip is only applicable for longer term projects. As a buyer, here’s what I want to know:

  • What’s the deposit to get started?
  • When is the next deliverable? What is it specifically and what do I owe you at that point? What I owe you may be payment, comments, or media/content.
  • When the project is complete, how will you deliver the source files, completed files, and provide any documentation?

Put this in a table or another easy to read format, too. When building that table, build the invoices in advance (with the date as the expected milestone delivery date) and deliver them with the proposal. This allows your client to have the invoices submitted in advance and they can give you a check when you deliver the milestone.

Develop a Plan for Change Orders Issued During a Project

Projects can change – bet you already knew that, huh? Well, what do you do on a project when you have a Change Order request from a client when you are almost done with the original scope of work? You were expecting that big final payment soon and now you have a Change Order that will delay the final payment.

My suggestion: in the Change Order, require a deposit for it and a percentage of that expected final payment. If you don’t do this, you could be in a cash crunch until everything is done.

Conclusion

These five tips are some of the many sales tips I’ve learned over the years. Most of these tips I’ve learned through trial and error but sites like these offer the opportunity to share ideas without having to make mistakes. Feel free to share your ideas below in the comments.

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About Bill Dotson

Bill Dotson is owner of WebMedley, a web hosting and application development company with over 1,000 clients. For fun, Bill advises freelancers and small businesses on sales and growth strategies.