The Hows and Whys Of Billing Practices

  • Posted on: 21 May 2014
  • By: Shawn DeWolfe

On my business page, I posted a series of processes, policies and practices. When I was writing them, they felt somewhat harsh. But these steps are a remedy to an increasing level of disaffection I was having with the consulting process. A week ago, I said that if you don't have a system, other people will impose a system upon you. Here's a decoding the hows and the whys.

Workflow

"How do we get started?" is a common first question. That question speaks to "workflow." I described the workflow.
Some people just want a task. When Nathan R. Johnson wanted to fill his zippo so that he could use the bathroom, the gas station owner knew there was going to be no money. Tasks are likely ignoble. Someone else got the whole of the project, and you get the project scraps. That happened with a recent project. Another company yanked a client around for two years and then I showed up on my doorstep to make it actually work. They got the project, I got the tasks. In a project, familiarization is a given element. With tasks, you have to pick-up midstream. There is unlikely a budget for loading the project and getting a grasp of it when you are asked to carry out a task. Someone has to wear that. I express the "wearing that" as asking for a high up-front deposit.

Social media engagements and advice on speed dial fits under the auspices of a retainer arrangement. A retainer system defines how some clients need to interact with my business.

In some cases, I do not need to compete, the work just happens. In the case of a sole source procurement, the first next step is to understand the project and define the scope.

The short proposal is a sales document. It describes the project and its details. When you give a client a proposal, they can circulate it internally. They can also shop it around without my permission. They can give it to a competitor and say, "can you do better?" That means the effort helps a competitor land your prospect. That's why there is an important footnote that reads that it's for confidential use. If it's shopped, there has be some language to chill the shopping propensity. That's why it reads that if the proposal is shopped, it's considered accepted. There are technical ways to track the release of a short proposal and monitor its access.

The long proposal is great system that I wish organizations would get behind with more frequency. The long proposal system severs the definition from the delivery. A long proposal can be used to procure work from the most experienced contractor, or, the proposal can be used to find another contractor. The long proposal is a document that a client buys and pays for.

Industry Terms, Concepts and Buzzwords

I do web development. There are some concepts unique to the dynamic. I am building applications, but those are different from apps. I have had wouldbe designers try to impose paper layouts (eg. multiple columns of text force people to scroll up and down to the screen to read a page). I have had clients look at the white space on a high resolution page and try to fill up every blank space. I have had clients who didn't understand that a web site needed a web host.

When people don't understand something, they break one of two ways:
  • They defer to an expert. I've been doing web design for 18 years. I've been programming since the 1980s. I know what I'm talking about. Listen to me on complex topics.
  • They discount the problem. Some people don't know how to market a website, so they discount that it's a necessary step. Just because people don't know how a car engine works, it doesn't give them license to play in traffic. Ignorance is deadly, not bliss.

Billing Practices and Billing Cycles

Budget conscious clients are a dime a dozen. I understand the need for good value. This is why I lean on Wordpress and Drupal so much. Back in the 1990s, I used to build admin systems from scratch. It was an expensive process to put in place user management, content management and modularity. Now, all of that can be handled in a 30 minute process. It's estimated that the development cost of a full-fledged install of Drupal is something like $4-million. I can believe it. When a client begins with a CMS, they are getting a seven-digit leg up. When they want to build on customizations, they may be staring down 100-hours in changes. I will try to insist on well-thought out designs and best practices. Ultimately, a client can spend their way into overruling me.

Invariably, clients who insists on a fixed price delivery, will also insist on an open-ended development cycle. It's not an all-you-can-eat buffet. As clear as possible, I have said, None of our projects and tasks are fixed price deliverables. Change management happens and I think no client would want a fixed-scope.

A deposit is a massive dividing line. I used to be overtly mindful of a client's finances. Really: if they cannot afford a deposit, they cannot afford the final work. If they cannot afford the work, they may try to get so much value packed into the project, that should they have to pay, they can do a lot with it. A deposit will cause some clients to unlatch. Work you do not get paid for is a killer. Work you do not have to do, frees you up for business development time.

Rates

I put my rates out there. They are inside of the range of the industry standards. In Victoria, budget tolerances are frail, so my rates reflect the region.

Additional Fees

I have been killed by clients who will contact me and suck down many hours on correspondence. Yesterday, one soon-to-be-former client demanded a long explanation of something (see above re: deference vs. discounting of experts). While I was writing out my response (at 9AM on the first day of business since their weekend email came through), they pinged me to ask when they were going to see the response. Remember those anti-shoplifting ads from the 1980s ("Q: why are these prices so high? A: shoplifting affects the prices.")? If client sucks down four hours of my day by demanding correspondence, that has to show up somewhere. Skype, Hangouts, FB Chat-- I get a never ending dripping IM tap of "hey!" That kills productivity. When I turn those off, clients will get into a spin cycle of "I couldn't reach you!" which usually actually means, "I didn't try to phone you or email you, but your chat is turned off!" The additional fees are a means to account people who want information updates instead of progress.

Overdue Invoices and Fees

I worked for one place that had a consultant doing work for them. He ran from an approach of "fill up the account and we'll run it down through work." It's a fine approach. When the business let the balance get to zero, the work stopped. One of the partners said, "Can't they, uh, just pick up the work?" The other, more pragmatic partner, said, "We're big boys. We knew that when the balance got to zero, they would not do any more work with us." The latter guy figured it out. Business relationships are founded on money and value. If there is no money, expect no value. Overdue accounts result in a cessation of work. It's on the contractor to stick to that rule. It's on the client to understand the impact of non-payment.

The Shift

Some may think that this policy page throws a big wet blanket on client generation. I would argue that the page does two things: it spells out the interaction from our perspective. If a client doesn't like what they see, they will not work with us. That's okay. Second, why should this be secretive? When someone sees these rates, they're out there. All the way out there. In a competitive mindset, who would you rather work with? Someone who has a well-masked and secretive set of billing practices; or someone who hangs them out there for the world to see? At the foot of the page, I made note that I posted it under Creative Commons. If you're a competing web developer, take the page and its phrases, and make it into yours. Re-mix and re-use. If the well published details of my practices give my consulting business an advantage, I say: level the playing field and publish a similarly open document.

Last updated date

Wednesday, May 21, 2014 - 12:05