After reading the previous post, ‘Protecting Yourself from Non-Paying Clients,’ a sample was uploaded and on the Letter of Engagement, you may have noticed three lines of text on fees:
Fees:
List the fees.
Starting deposit is required when the project begins (40%)
Final payment required on project completion (60%)
Starting Deposit to Start the Project
Two things why I ask for a starting deposit:
- One, you want to make sure you schedule your client into your schedule. Not knowing how many clients you may have, or maybe you have a busy schedule, but putting your client into your plan, it puts the onus back on you that this job is serious and needs your attention.
- Secondly, it does sort of weed out the clients. If the client is serious about the project, they should sign the work order for you to get started. If not, weed them out now versus later, when they don’t want to pay you! This is a great way to see if clients will pay or not. If clients balk paying you now, just imagine when they don’t want to pay you when the job is done!
Percentages to start
Why 40% and not 20%? This is up to you. In the past, I used to do 20% starting, 40% mid-way, 40% fulfillment. Which meant three invoices! I have at times request 40% upfront. And right after wireframes, I request another 20%, with the final payment at 40%. It depends on how the flow of things is going through. Go with your gut instinct.
Then, I started to see more favourable results when I changed to 40% start, and 60% completion, because the clients were more invested in the projects. Although the percentages can be changed, whatever you feel comfortable in applying for the starting deposit.
Nickel and Dime Clients
You will come across some clients who will nickel and dime you. Or clients who want to barter or swap services for them. Or ask you for a discount. Giving discounts sometimes feels and devalues your work. If you are starting, sure it makes sense, but it could also backfire on you too.
For example, on one of my earlier freelance projects, I designed a business website. As a participant in the Breast Cancer Run (separate from the Fun Run in a previous post), I also had a team of two runners with me. In exchange for the website design, the client would pay for my runners to run ($150 per runner—a tax receipt will be given). So the client gets a $450 official tax receipt. At the time, it gave me a portfolio piece. But, I know I sold myself short.
My client did refer me to one of her clients. And the client wanted my design services at the same rate or less. Meaning, she would donate to her choice of charity in her name (so, I don’t get the tax receipt). Sadly, I had to turn this down. Did I turn down a chance of a lifetime? Why? The person who asked me was an upcoming actress at the time.
First review, please? Spec? Free?
Spec work (short for speculative) is any job for which the client expects to see examples or a finished product before agreeing to pay a fee. I used to work for a company that did just this. But, when you work for a company, we still got paid for it, so it doesn’t matter. When you are freelancing, or a consultant and this is your main bread and butter, I don’t think this is a good practice.
Craiglist is notorious for this. And companies will ask for design specs and give reasons why you developed it. I think these are scams because they are getting free ideas knowing they don’t need to pay for them. It’s a sneaky way of doing things, but I also believe in karma too! I also have seen people who write back and calling them out (I will update this post if I can see examples of these again), but Craiglist has been great at weeding out potential scams like these.
In talks, but no signed letter?
Don’t despair if the client that you are speaking in the past few days haven’t gotten back to you with the letter of engagement. Maybe, the client went on vacation. Go ahead and send them a reminder email or call to see if they received the email. The client may be busy and may not be able to respond. Or maybe, the client has a change in plans? Or worse, they don’t want to go with you. It is what it is!
Recently I was asked to do some work — a letter of engagement sent to the client. I mentioned I would also get a quote from the commercial printer. The client didn’t contact me, nor was the letter of engagement signed. I called one of the business partners with the client, and after our call, it seems they didn’t need me after all. The quote from the printer? I didn’t pursue it any further because there was no use for it.
Approximately four weeks later, the client contacts me with a signed letter. Of course, the client asked about the quote, and I told the client I didn’t pursue this because I didn’t even know I was getting the contract. It was all a misunderstanding on their end.
Standing Up For Your Rights
Don’t devalue your services. Instead, give value-added services. Be honest about the work and fees you provide and charge.
What do I mean, standing up for your rights? If you told your client and followed through on what you say you are going to do, but the client doesn’t compensate you, what would you do? Every situation is different. It’s always wise to have some type of documentation.
If you talk to the client by phone or in person, but there is no signed agreement or paper trail, it’s your word against their word. But, if you are professional about it right from the get-go, and have a signed contract, agreement or engagement letter, it will protect yourself when it comes to payment or other mentionable in the letter. Always have a paper trail.
Does Honesty Pays?
When I first started as a freelancer after I graduated from school, one of my freelance contracts was a work order for WorkSafeBC. It was substantial. I wished I kept that work order. On the work order was a $100,000 maximum payment. The publications department at that time would outsource the work. I was very fortunate to get an opportunity of a lifetime because a former instructor couldn’t do the job at the time, and suggested me to do it.
WorkSafeBC asked me how much it would cost for design, typeset and colour correct two publications. I guess-estimate of $10,000, and the client grants me to go ahead on the work order. The finished job, it took me much less time than needed. Being green at the time, I asked my parents what to do in this case. One of my parents says to charge the full price, the price that was agreed on. The other parent says, charge for your time and add a little more, and maybe you get repeat business for being honest.
So, that’s what I did. Invoice the client for the time spent. The client calls me and says there must be a mistake on the invoice. No mistake, over-estimated and didn’t felt right to charge WorkSafeBC so much. Guess what? The client called me several times after that! Repeat business. It’s how I strive and thrive in the early days! But, in theory, I could have charged the full-rate of $10,000. That was the value of the work. I did the opposite, I did it by the hour because I was a rookie at the time.
Overall, when you are indeed getting the feeling that you are getting a client, always protect yourself with some type of documentation in what you are going to do, not going to do, and the fees. And get the client to sign this document. If you get into the routine from the beginning, people will know you take your job seriously, and you will feel much better knowing that you are protected when the time comes for payment.