Question

Topic: Career/Training

Best Practices For Billing Marketing Services?

Posted by Anonymous on5/4/2009 at 4:42 PM ET 250 Points
I've been a marketing consultant since 2001, but just wanted to get some input from others on how they bill their work. For the first time in many years I'm having to pitch new business and am starting to second-guessing my billing practices as so many businesses are extremely budget-focused right now.

At the beginning of a client relationship, it’s relatively straightforward: I quote them a certain amount of hours to complete a particular project such as writing a brochure, and I bill them at $75 per hour, being careful not to bill more than I quoted. However, (and this is the case with all of my current clients), they ask me to take on more and more projects, for which I continue to bill hourly. Eventually, they start to treat me as their marketing manager where they forward all advertising inquiries, ask my opinion on various small marketing decisions, etc. I use getharvest time tracking system, so I track even 5 minute increments like answering an email.

Here’s my dilemma: some of these activities would be considered ‘lower level’ activities, such as updating directories online to make sure the company’s correct location shows up in review websites. The companies I work for don’t have the time to do this themselves, but should I establish a lower level rate with them for this? I don’t want the companies to look at my invoice one day and decide they don’t want to pay $75 an hour for me to update their Facebook page.
Some people have advised me to treat my work like a lawyer does - every minute should potentially be billable. Others advise to turn everything into a project and bill at a project rate. However, often I have so many projects that it might be overwhelming on an invoice. Right now the way I bill is by date: i.e. I worked on your brochure revisions, talked to three advertisers, checked out your citysearch page to make sure there's no new bad testimonials = 1.5 hours.
我会雇佣一个低水平的人来做这件工作but the tasks are so sporadic and varied that I don't have the resources to have someone 'on call' to learn how to do the tasks and then do them in the time required.
Do I change the agreement with my current clients? When pitching new clients do I quote two different rates?
Sorry for the long post - I definitely appreciate your feedback and would be happy to answer any of your questions as well - just let me know how I can help.

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RESPONSES

  • Posted bymichaelon5/4/2009 at 5:58 PM Member
    I will admit that I do a lot of free stuff that I shouldn't. But I am clear that if it becomes abused...or I can recommend a better alternative...that I'll let them know.

    Maybe I've just been fortunate with clients. Or, maybe in the "selling phase" I've done a good job.

    You could just ask if they really want to pay $75/hour to have to update the facebook page.

    Michael
  • Posted byJay Hamilton-Rothon5/5/2009 at 8:43 AM Member
    Right now you're trading your time for money. You've established your time is worth $75/hour. How businesses choose to use your time is up to them.

    If you have assistants that can do lower level work, then you can establish their $/hour rate and bill out accordingly.

    If you have sufficient lower level work, then bring in a (temporary) assistant and begin to grow your business. If you don't, don't reduce your rate piecemeal. Perhaps you can create a "marketing package" for your clients: they pay a fixed rate/month for these small "add-on" services.
  • Posted on5/5/2009 at 4:28 PM Accepted
    DON'T tell them that some of your services are at $45 an hour. Your scope creep will spiral out of control. Clients will start trying to push work into the lower cost category, i.e. "You're just updating/changing a few things, surely that doesn't fall under the full rate." You'll be amazed by what they consider to be lower level work. We used to do it this way and it was a nightmare, constantly negotiating and defending what was 1st tier and 2nd tier work.

    You will make more money if you stay at $75 and throw in the occasion five or ten minutes of unbilled time. Once you start devaluing your own services, clients will view you differently. If you do a great job and produce results, don't be afraid to charge for it - discounting is a very slippery slope.
  • Posted bytelemoxieon5/6/2009 at 8:58 AM Accepted
    I would not recommend that you drop your rates. In fact, I think you could make an excellent case for increasing your rates. I'm glad to hear that you have been successful for so long, and that you have been successful in finding new opportunities to bid. (All too often on this forum, people write in that they are marketing firm who can't find opportunities, and it sounds to me as though they might be in the wrong business...)

    If you start to give higher prices for new work, and word gets out to your current customers that you are beginning to raise your rates, they may be you what they can do to lock in your current low rate.

    I would suggest that you consider hiring an entry-level person, such as a part-time high school student, who can help with some administrative tasks. You will probably find that you can hire some very bright people at fairly the rates. Not all of their time will be billable but it is amazing how helpful they can be running to the post office, doing data entry, and performing other similar tasks, which allows you to get more billable hours in each week. If they are able to do some of the work which is billable at $75 an hour, and you are paying them eight or $10 per hour (with very close supervision of course) so much the better.
  • Posted byGary Bloomeron5/6/2009 at 1:59 PM Accepted
    Jenny,

    To leverage your time, consider telling ALL clients that effective as of a certain date (give them 60 days notice in writing, with at least two reminders), all your services will be billed at your new rate of $85 per hour.

    A friend recently met with a lawyer in Manhattan. The lawyer's fee? $500 per hour. The lawyer spelled out from the beginning, that for an hour and one minute, it would be an extra $500.

    When you eat in a restaurant, you don't expect to pay for only half a meal if you're full halfway through the main course, do you? If you go to the opera and you leave half way through the second act, you don't expect to pay only for the part of the show you've seen, do you?

    Clearly spell out each task you will do. Also clearly spell out what you cannot do, or that you will outsource if it is below a certain amount of time. Also consider telling clients and that your outsourcing rates will be $100 per hour.

    If you cut your rates you'll never get them up again. To outsource, considerwww.e-lance.comorwww.yourmaninindia.com. You contract them to work for you at a certain rate, you quote your clients a higher rate. You pay your outsources, they're happy.
    Your client pays you, you're happy, and you keep the difference.

    But don't undersell yourself.

    Gary Bloomer
    Wilmington, DE, USA



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