Help me figure out what to charge this high maintenance client
March 4, 2015 7:21 AM   Subscribe

I am a freelance consultant and I have a client who is especially high maintenance. She sends a lot of emails, asks a million questions, changes her mind occasionally, etc. I worked with her on a couple projects soon after starting my business a year ago and now she would like to do two more big projects with me.


I charge a flat fee for my services, which is based on the amount of time and effort I expect a project to take. My client agreement states that if there are significant changes, or if they ask for unusual or additional services, there would be additional charges. (Most of these clauses are a result of working with this particular client). If the project does not change, the rate doesn't change.

So now I have to figure out what to charge her for these projects. For a normal client, I would know exactly how much to charge - similar rates to what I charged her for prior projects. Last time I worked for her however, I felt resentful that I was doing more work than I thought I was being compensated for. I don't want to charge her so much that she won't work with me - it's nice to have repeat business, especially big projects - but I don't want to feel underpaid.

I've thought of charging this client an hourly rate instead of a flat fee - but I think I'd have to give her an estimate of how many hours it would take, and that's tough to do. I'd probably guess 12-20 hours, spread out over 10 months or so, for each project. My hourly rate is $100, and $1200-2000 would be too much to charge for these specific projects. $600-800 would be more reasonable. I don't want to lower my hourly rate, because I'm worth more than that... if I gave her a rate of $50 per hour, I think it cheapens the perception of my value.

One option could be to give her a rate for each project and tell her how many hours I think the project should take. I could explain that the fee covers that many hours, and the cost for additional hours would be $x per hour... but then I feel like I'd need to explain why I'm doing it this way. The truth is that she's more high maintenance than my other clients and demands more time, but I'm thinking telling her that could be offensive and result in me losing the client completely.

Part of my difficulty in estimating and billing hourly is that I spend extra time on things just to make them right - reconfirming details, figuring out the best way to present options to a client, learning more about the specific needs of each project, background reading, talking to colleagues for advice etc. Having never billed hourly, I have no idea whether the time spent on things like this should be charged to the client or not.

Any suggestions are welcome.
posted by anonymous to Work & Money (12 answers total) 2 users marked this as a favorite
 
One option could be to give her a rate for each project and tell her how many hours I think the project should take. I could explain that the fee covers that many hours, and the cost for additional hours would be $x per hour... but then I feel like I'd need to explain why I'm doing it this way.

This is not an uncommon model for consultants, right? It'll be important to also give a full account of your time if you choose this billing model, so keep that in mind. It may also help establish a good feedback loop with the client: if she sees she's spent a few hundred bucks on redesigns and answers to silly emails, maybe she will clamp down on it next time? It is possible she is taking advantage of your willingness to provide her this extra work for free.

So how do you roll it out? Are these projects different in some meaningful way from the previous ones such that you can say, "for projects like this, the total work is less predictable, so I feel that an hourly model is more appropriate"?
posted by goingonit at 7:31 AM on March 4, 2015 [2 favorites]


My client agreement states that if there are significant changes, or if they ask for unusual or additional services, there would be additional charges.

You need to internalize this as an inherent part of consulting on fixed fee basis. The scope of a fixed fee contract needs to be well-defined, and it should be well-understood that changes from that scope results in additional charges. In other words, a client that requires you to explicitly state that isn't really much of a client to work for. Clients should understand that implicitly as part of fixed fee consulting.

My hourly rate is $100, and $1200-2000 would be too much to charge for these specific projects. $600-800 would be more reasonable.

Your post is internally contradictory here, and you need to resolve that. If your market value is $100/hr (which may or may not be true), and the work will take 12-20 hours, then the value of the job is $1200-$2000. If the value of the job is less than that, then there's someone on the market that will do the job for $50/hr, and your market value is no longer $100/hr (it's $50/hr). You seem to be thinking that what a job should cost is not connected with your hourly rate. That is not the case.

The truth is that she's more high maintenance than my other clients and demands more time

Why do you need to tell her this? It's entirely appropriate to respond to a request for a bid with a simple statement of "x hours at $y/hr". If the client questions that, you can negotiate, but you're never under an obligation to justify your quote. Her only recourse is to go to another consultant. If you are appropriately estimating your time, then no other consultant should be able to provide a cheaper rate (even if they underestimate the first job to get her business, they will have to return to correct estimation in the long run).

Having never billed hourly, I have no idea whether the time spent on things like this should be charged to the client or not.

It doesn't really matter. You can make your hourly rate high and then not charge for all that time or you can make your hourly rate low and charge for all that time. The client cares about how much something cost - not how it gets allocated in your invoice.

You should charge enough to make the consulting worth your time. If it's not worth your time, you should charge more or else stop doing the job. You need to figure out how much you value your time and then charge accordingly.
posted by saeculorum at 7:33 AM on March 4, 2015 [6 favorites]


In the final analysis, it sounds like you want one of the following two things to happen:

1. Client stops being a PITA and you charge her normal rate, or

2. Client continues to be a PITA and you charge her more.

I don't think option 1 is likely. As for option 2, it's not like you're going to fool her into paying more (and that's probably not a good way to go, anyway). So I think you're going to have to man up and charge more. She'll either take it or leave it.

You don't have to tell her "I'm charging more because of you" - just tell her that your rates have evolved over time to become more realistic in terms of time, effort, and costs, and that you're consistent with the market rates (although, of course, you provide superior service).
posted by doctor tough love at 7:36 AM on March 4, 2015 [2 favorites]


I don't understand how you bill at a flat rate without having an accurate sense of how many hours the project takes. Without this, you're just silently lowering your hourly rate as the project moves toward (or above) the upper end of your flat-rate estimate.

When I do flat rate billing, I tell the client that the project cost assumes X number of hours plus or minus 10%, and that additional hours due to change in project scope will be billed at my regular hourly rate.

Whether I'm doing hourly or fixed, I report my hours every week so they know how much time it's actually taking, and I let them know before we're get to the upper limits of an agreed-upon amount so that any overage doesn't come as a shock.

Yes, I bill the client for the kinds of "extra tasks" you describe. But if the client is price-sensitive, and you don't want to just eat the hours, then you may need to get more efficient by reducing the time spent on these tasks.

Basically, flat-rate billing is a gamble on your part. You gamble that you can do the work in the amount of time estimated; if you go under, you pocket the difference. But if you go over because you didn't or couldn't accurately scope the project, then you eat the difference. And that's what it sounds like you're doing right now.

I think a client like this is a bad candidate for fixed-rate billing. I would bill hourly on a not-to-exceed estimate that includes an additional X% for project management / client babysitting. You don't need to reveal this surcharge to the client, but you do need to start accurately estimating your projects and getting paid for time actually spent.
posted by ottereroticist at 7:46 AM on March 4, 2015 [4 favorites]


"... but then I feel like I'd need to explain why I'm doing it this way."

By explaining what you want to do, you're already explaining why you do it that way, but the trick is that you talk about how you're already implemented this in general, and how helpful this is for all your clients (and of course any past issues that led to a change in policy were certainly with somebody else, not her!)

"I've modified my billing policies this year, to make things more flexible for the needs of individual clients. While I continue to bill the project at a flat fee rate based on my estimate of the hours spent and the overall effort for an average project, I'm also adding hourly rates to be billed after a maximum number of project hours. I want all my clients to be happy with the final result, even if their eventual needs weren't part of the original quote."

I'd then list the quote as two line items:
"project fee $800, anticipated 12-18 hours"
"hourly fee for effort beyond 20 hours, $80/hour" (notice you've got a "grace period" in there, this is you admitting that you can underestimate sometimes and it's not their fault)

Given that your 12-20 hour, $600-800 estimate has you earning $40-65 per hour, a client would reasonably assume that $100 is not your hourly rate for doing this kind of work (i.e. you might charge $100/hour for some other topic or some shorter number of hours) so I wouldn't list that as your hourly fee for extra project hours.

Note that I'm not likely to be "right", I'm just giving you some ideas.
posted by aimedwander at 8:48 AM on March 4, 2015


Freelancer myself - I've taken on jobs for less than I should have because I was worried I might not get more work for a while. It's always something I end up regretting. I'd charge her a premium on top of what you think her extra work is going to cost - if that's $1200-2000, so be it. If she doesn't want to pay it, she's no longer your problem - you'll find other clients.

She may go elsewhere, and realize the service isn't great and want to come back to you at your higher rates.
posted by backwards guitar at 10:43 AM on March 4, 2015 [1 favorite]


I would move her to hourly billing in a heartbeat. I would also try and invoice her as often as feasibly possible so that she sees early on how expensive the phone calls/emails/tweaks can get -- no less frequently than monthly.
posted by craven_morhead at 11:20 AM on March 4, 2015 [1 favorite]


Depending on how your work is structured (I couldn't tell exactly what type of projects these are and how your workflow goes), you could try a variant of the following, which I have seen in the (transactional, not litigation) legal world: a flat fee (or estimate based on hourly rate) which is explained to the client as getting them to a certain point in the project. I.e., "It will be (exactly/approximately) $X for the initial planning meeting and up to sending you the first draft of your estate planning documents. After that, time is billed hourly."

Clients who want you to explain every bit of the draft documents to them then pay for it and understand they're paying for it. Same with most change orders.

Separately:

If you are billing hourly and using estimates (i.e., $100 and hour and estimating but not guarantying $1200 for the project), it goes best for me when I keep on top of how much time I have billed so far, and if the client starts making changes or asking a lot of questions that are going to inflate the fee, I let them know that what they're asking will increase the cost of the project. For me this has sometimes helped some of the more high maintenance clients tone it down a bit, but it doesn't work with everybody.
posted by bluesky78987 at 11:26 AM on March 4, 2015


When I quote a project, I like to state that it includes two rounds of revisions and additional revisions are billed at $60 per hour. Most clients will try to cram in all possible changes during the two revision sessions, because they know that they'll run into additional charges afterwards.

If you go that route, I don't think that you need to explain it much further than that. It's just a time-management strategy, and it's totally reasonable.

It's also fine to raise your rates with this one particular client. Personal finance expert Ramit Sethi had some tips on raising your rates at the bottom of this article.
posted by Ostara at 11:41 AM on March 4, 2015


Flat rate? Never. Ever.
posted by humboldt32 at 2:47 PM on March 4, 2015


"... but then I feel like I'd need to explain why I'm doing it this way."

I think you need to get over this. Regardless of how you choose to bill the project you need to be completely up front about how you work and how you bill at the beginning to avoid misunderstandings (and I don't know what makes sense for you, from your question it sounds like a flat fee up to a certain amount of hours, plus normal rate over there makes perfect sense to me). It sounds like maybe you are new to freelancing, you will get better at this over time, but it's not some taboo subject you should avoid. It is the conversation you should have first.

As far as high maintenance clients, absolutely charge a premium. My go to is "I have enjoyed working on your projects and look forward to collaborating with you on X and Y in the future, but as my calendar has filled up more and more recently I have raised my rates/changed the way I bill and going forward.... insert your rate increase or change in fees here". If dealing with them takes up a lot of time, you should factor that in.

FWIW my difficult client markup is 100%. I double my rate. Never once regretted it even when they walked.
posted by bradbane at 3:14 PM on March 4, 2015 [2 favorites]


When I was freelancing, I used to have clients make endless stupid revisions. Once I implemented that they got two rounds of revisions at the fixed rate and then after that were charged on an hourly basis for ongoing work, it's surprising how quickly they managed to make up their mind and stick with a decision. Either way you win, you make more money or the client stops messing you around. I called it the a$$hole tax...
posted by Jubey at 3:36 PM on March 4, 2015 [1 favorite]


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