Knowing When to Start Billing
Posted by Brad EgelandIn this article, I am again looking at it more from the perspective of the IT Consultant rather than purely a project management situation. Ultimately, the two are often one in the same, but in this instance the IT Consultant/Project Manager is running the entire show themselves in an independent role and working through the perplexing situation of when to start billing, what to give away for free, and how much leeway to give the customer/client.
One thing you must understand when dealing with new clients is when it is proper to start the clock – when you should start charging the client for your problem-solving services. Both during the interview and afterward, new consultants are tempted to rush in and do their best to solve every problem that the client presents them with – long before they’ve gotten any real commitment from the client to pay them for these efforts. Although providing such free assistance may make the client very happy, it by no means ensures that the client will subsequently pay you for more work. In fact, quite often the opposite is true. As one consultant I discussed this with stated that giving away free advice usually leads to giving away more free advice. It’s hard to break that cycle with some clients.
Clients are human
This isn’t because clients are exploiters. It is just normal human instinct to see what we can get for free and only pay for what we absolutely have to. But because clients will gladly allow you to do work for them for free that they can’t bring themselves to pay for, successful consultants must pull off a delicate balancing act. They must suggest to clients that they can solve their problems, without actually solving these problems until the clients agree to pay for it.
Which is not to say that you won’t do some work for free. Almost all successful consultants accept that they have to give some work away for free periodically to clinch a deal with a client. Most consultants give clients a free initial consultation lasting anywhere from one to three hours and many invest more unpaid hours drawing up formal proposals for potential clients.
Set consultation limits
But successful consultants also know that they must set clear limits on how much unpaid time they will devote to the client. One consultant I’ve worked with explains it like this…”Generally, I don’t bill for the first meeting with a prospective client. But I don’t give any real advice in that initial meeting either. Once we’ve gotten past the first meeting and agreed to the terms of the contract, then all the work that I perform related to that client is billable.”
Another colleague of gives potential clients one or two hours of free time in which he explains his services and shows them how he might be able to help them. Then he explains that for any concrete and in-depth analysis, they’ll have to pay.
Though experienced consultants emphasize the need to set strict limits on the amount of free time they spend on any client, new consultants often fear that they can’t get away with this kind of behavior because of their lack of experience. They tend to think that giving away a free sample of their work might be a more effective way of landing a new client. But experienced consultants will likely agree that this is almost always a mistake. If you don’t act as if your time is valuable when confronting clients, then why should they? I guarantee you that they won’t place a higher value on your time than you do.
Set client expectations
It is important to make it clear that you expect to bill for your solutions. It is equally important to let the client know when the billing clock will start ticking. Many consultants state that their potential clients tend to stretch out that first meeting and start to ask for advice during that initial consultation. An easy way around this is to follow a strict policy that the first hour is free. After that, all time is at the normal billing rate. This does dictate that the rate be discussed and established as early as possible so you need to feel comfortable about that very early on. Establishing policies such as the one free hour stance lets the client know up front that you will not allow yourself to be taken advantage of.
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