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5 Tips for Charging Clients for Services – Colorburned
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5 Tips for Charging Clients for Services

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.

Follow Bill Dotson on Twitter or visit his Business or Personal website.

Bill Dotson

Bill Dotson is owner of <a href="http://www.webmedley.com">WebMedley</a>, 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.

  • http://www.dai-media.com Aleks

    Verry helpfull, thx for share.
    [rq=517621,0,blog][/rq]Vuelta al trabajo

  • http://www.fnky-mnky.net Steven McCurrach

    This was a very helpful post!
    Exactly the kind of information I’m needing at the moment.
    Thank you!

  • http://sean-nieuwoudt.com Sean Nieuwoudt

    this is a great article! Definite bookmark!

    Thanks

  • http://www.mikedegreef.be Mike De Greef

    Great article,

    Could you maybe give us an example of a full menu for your clients if that is possible? would be very usefull for me as starter!

    Thx for sharing

  • http://365icon.com 365icon.com

    Excellent post Grant! Bookmarked before I even read it. I really enjoy your site.
    -Jonathan
    [rq=520292,0,blog][/rq]Modern Chairs

  • Paul

    Seriously, thank you for writing this. It’s something that’s been gnawing at me for the last 3 months. I like the menu idea a lot.

  • http://stefanm.wordpress.com stefan4m

    strangely enough, most of these tips sound very familiar – … ah! One of our suppliers – a company that offers services to us – has them implemented, but sometimes is so much hussle for the customer/client, that if the client is smart enough they will do the small updates/functions that this supplier does – SO THAT THE RETAINER FEES would not constantly go up! At least that’s what I noticed…
    [rq=520837,0,blog][/rq]social media articles august 16th – august 31st 2009, twitter, facebook, etc

  • http://www.justprofessionals.com Jason

    Love this article, I think we’re going to adopt a couple of these.

  • JS

    I went this route…if you have a client that makes a lot of changes or can’t make a decision you will lose money. I’m glad this is easier for you, that’s great, but the designer also has to make a living at their craft. It is not really a hassle to give a ballpark figure to someone who asks the time question. If you have been doing this long enough you should have a good idea on how to handle those questions. After all how else could you come up with a menu of prices? You would have to have a good idea of what a project entails (time wise) to do that. Otherwise you would lose money. If I say, charge 300 dollars for a logo & put 30 hours into that logo (because of the customer) I would only make 10 bucks an hour. This may be fine for you…but not a good strategy to make a living by.

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  • http://tutorijali.hdonweb.com/ Ivan Miši?

    Usefull tips. THX
    [rq=539574,0,blog][/rq]RSS kanali pra?enje novosti

  • http://blog.yellowdoggdesigns.com Mark

    This was very helpful. The automatic renewal is something Imay consider also. One of the comments mentioned that not charging by the hour could lose you money if it goes over a certain amount of hours. But I believe if you monitor and stick with a specific process then the client does not have any room to add unecessary time to a project. Even if the client goes outside that process then you are still free to charge for that as well.
    [rq=562069,0,blog][/rq]DOs and DON’Ts of Social Media

  • http://www.theComplexMedia.com/ theComplex

    I’m not sure I’ve found the flat rate method to be effective.

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  • Hunter

    Would love to see the full “menu”. Is it online somewhere?

  • Adam

    Brilliant and succinct article. A lot of fledgling designers and business owners could benefit from incorporating those tips into their everyday business practices.