Is This A Good Way To Charge Clients ?
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- Louno
In the past ive always charged my clients either by the hour ( fixed hourly rate ) or by project ( price for the whole job )...
Now we are thinking about changing that for another system, we didnt invent this system obviously, but i was wondering if this is common or not in our field...
Basically, we would sell hours by blocs, for example :
1 hour block = 100$/hour
5 hour block = 85$/hour
10 hour block = 75$/hour
20 hour block = xyz
and so on...The advantage is hopefully to build long term relationships with the client because he will come back to us since he already has "hours" that are prepaid for.
Also, on our side, it will be easier to bill the clients... what i mean by that is that, we always get emails or phone calls from client, asking for little things, an image, a quick update, anything, alot of time its stuff that takes 30 minute or less so we dont charge them... but with this system, even if we do a 30 minute job we can take it from the prepaid time without sending a bill for a 30 minute job...
what do you think ?
- zenmasterfoo0
I'd buy the $20 block and then rape you for everything you could give me. Be careful this doesn't create a project billing loophole for you clients. They WILL punish you for it.
- I dont see how ? they buy a 20hour block, means we will work 20 hours for them, after that we have to bill them for some moreLouno
- math = my weak suitzenmasterfoo
- iheartfun0
No...
- harlequino0
Usually you see the following:
Hourly rate
Day Rate (with % discounted)
Weekly Rate (additional % discount)
- tesmith0
Doesn't that leave the client with the opportunity to criticize how quickly you work? I think you need to get a handle on how long a project should take and charge extra if there are unreasonable changes or lack of approvals.
- Louno0
can you guys be a bit more specific, has to why this is not a good ideal or why it is good , pro / cons ...
My partner is convinced this is a good ideal, I thought of it for a few days and he convinced me, this is a standard billing procedure for people working in the IT/tech/network industry around here, but not so for design/web agencies, and i wonder why.
thanks for all comments, much appreciated
- uberdesigner0
sounds like it will be harder to give a quote
- lherb0
Looks to me like you'll work yourself out of any profit. The more you work the less you'll make.
- harlequino0
You're going to have unending pissing matches with clients over how much time was spent on things. It's really a standard - hourly, day, weekly.
- 5timuli0
The best way is what's know as the OTA Methodâ„¢
Out The Ass
- harlequino0
"Also, on our side, it will be easier to bill the clients... what i mean by that is that, we always get emails or phone calls from client, asking for little things, an image, a quick update, anything, alot of time its stuff that takes 30 minute or less so we dont charge them... but with this system, even if we do a 30 minute job we can take it from the prepaid time without sending a bill for a 30 minute job..."
Don't mean to be telling you your business, but it sounds like you guys could benefit from some business consult. Seriously, sounds like you are burning profit big time. Why bill for 30 minutes? How about an hour? Don't tell a client what takes little time or no time. If if you are doing this for clients, why not create a new policy in which you will provide these small services, but they have to retain you as a company?
You're gonna get killed for money. The point of charging effectively is not to make things easier for the client, or even you for that matters. It's to be profitable.
Again, best of luck, and i don't mean to get on your case or anything, but you may really want to think seriously about your business plan.
- Louno0
The way its done is we first evaluate time needed for the project, then we give the price list to the client, and tell him we estimated that it will take 37 hours to do this project, if you want you can get the 40 hours block which gives you a discounted rate and if our estimation is accurate this gives you 3 extra hours of work you'll be able to use for other things you might need, support, email signatures, banner, seo, anything...
If not, then you can get the 35 hour block and then pay the extra 2 hours at our regular hourly rate.
something like that...
- lherb0
Another problem becomes if a job goes over. ie If a client buys a 20 hr block but the job takes 22 hrs, does he then pay $100/hr for those two over hours, which he won't be happy with, or do you charge him based on the 20hr block rate which then sets a precedent that because he bought one 20hr block one time that that will be your hourly rate from now on with that client.
- Louno0
harlequino, we are a small company still, we want our clients to come back to us and we dont want to annoy them with bills for 1 hour of work when we both know that it was a really simple thing to do on our side and it took 15 mins... We might not be making as much money as we could on this 1 job, however in the long run maybe it will generate more money because client will come back..
Im just playing devil's advocate, im more on your side ... what i like about the block thing is really the possibility to add up all the little 5 minutes here and there...
- iheartfun0
They are things called "Quotes" for a reason.... then negotiating.... then punching the client in his over zealous mouth!
I'm a people person I swear
- Louno0
lherb , if the project goes over estimated, what we do is BEFORE we go over, we tell the client, and we give them the option to upgrade to a bigger block of hours. simple...
- version30
make them come back to you by building lasting relationships with strong work and communication. (the fact you have the source files for any changes is just an added bonus) not tricky weird (Read:cheap) billing ploys
- harlequino0
i hear you Luono, but just from a practical perspective and as someone who hires dev/tech firms, I'd never agree to this kind of billing practice, it's be a dealbreaker for me and it's just plain odd. You want to just give me a hard price quote? Fine, no problem. But I'm not buying time blocks.
I totally get accomodating existing clients. We have clients of 5 years that get away with murder, but we make sure we don't get fucked. Use your judgement for existing clients, but for new ones, you're gonna get railed I fear.
- but hey, i hope it works. who knows. :)harlequino
- U'd go as far as NOT hiring us bcuz you find it odd practice, even if its a ure advantage ?
thanks for inputsLouno - If you compare the same to another firm, yes probably. It's kind of transparent and I'd be waiting to get hit with more...harlequino
- hours later on. I'd pick the company with clearer billing practices. Sorry, it is what it is.harlequino
- its ok, thanks for the input, although, i dont find having hour blocks "shady", seems clear to meLouno