You asked for it. I hope this helps
Someone asked me to do a post on fees. As most of you know, my day job is attorney and my evening job is reading posts in W M W and trying to do SEO on my website.
So for what it's worth, I'll speak in general terms about what I've learned about charging fees.
Like most of you, I have a niche practice and much of what I do is something I've done many times before.
I got my start as a public defender (not a pleader, but a real trial lawyer with about 36 trials within a two year period). I was told I was a real good lawyer and went into private practice. I found out that I could be a real good lawyer and still be broke. I wanted to help people and did not know how to charge fees high enough for me to make a decent wage. All that changed after two years when someone who knew how to make money as a lawyer asked me to help him with his practice. What follows are general concepts I learned from him and use to this day.
Fees are a function of experience and reputation. Both usually track together. The more you have of both, the more referrals you get. Naturally, it's easier to close on a referral from a satisfied client than to close on someone who comes to you through advertising.
So what manner of payment should you require and how much should you charge?
First, I've found out that my clients like me to charge a flat fee. They simply do not like the thought of me charging by the hour, which is ok with me because I've found that I can make more per case (usually) with the flat fee concept. Every once in a while, I feel like I only make minimum wage on a case, but usually, if calculated on an hourly basis, my flat fee amounts to several hundred dollars an hour.
Second, when you first start out, you will probably charge too little. This is natural. However, you want to increase your fees as quickly as possible.
When I first went to work for my mentor in Atlanta, he set a fee for me that was much higher than I would have set for myself (but well under his fee). He used a massive questionnaire (sent out, returned, and reviewed before the interview) to inquire about a client's case. From that information, he assessed the case, told them how we could help, and at the end quoted fees. This free interview lasted about an hour, and more often than not, resulted in the client hiring us on the spot.
When you get to the point that everyone who comes in hires you, you know your fees are too low. If you continue, you will work yourself to death. The path to caseload management, believe it or not, is through fees. To use an over-simplified scenario, assume you average $2500 per job per client. You are making well over $100k per year after expenses, but you have no life outside SEO. In a perfect world (this is not and you will have to find the right figure) if you double your fees and halve your client base, you are making the same money and only working half as hard. (Of course if you have enough business to hire someone else, that's something different altogether - work them to death instead. ;))
I use a bifurcated fee structure. A pretrial fee is X amount and a trial fee (if necessary) is Y amount. On the pretrial fee only, I give a 10% discount if it is paid in one lump sum. People love discounts, and most pretrial fees are paid in one lump sum. To make payment easier, I have a credit card terminal and accept four credit cards (VISA, MC, Discover, AMEX).
If the SEO job will take awhile, and if the client balks at paying your money up front but still wants a discount, talk to your banker about an escrow account. Then take your up-front fee and put the rest in the escrow account. Withdraw a predetermined amount at predetermined times pursuant to your employment contract (get a lawyer involved to help with your contract).
My fees do not include expenses specific to the client's case such as long distance telephone, court reporter fees, expert witness fees, copies, mileage, etc. It might not be a bad idea to charge an extra hundred bucks or so up front for miscellaneous expenses and refund any difference once the job is done. Or just build an estimated amount into your fees. If you undercharge, you're stuck; if you overcharge, you get to keep it.
I tried to keep this as general as possible. Hope it helps some of you.
Thanks Lawman - great post :)
A wonderful post, lawman. I wish I'd met you three years ago. It would have saved me a LOT of time. I finally arrived at the same conclusions, but it sure took a lot of agony!
lawman - Thanks for the great post and for the StickyMail relating this to my earlier post about how much to charge for boilerplate. The flat fees concept half answers it, but not quite.
I generally do end up charging flat fees, but usually base those flat fees on an estimated hourly. So, I'm still searching for guidelines as to how many hours to say the boilerplate is worth:
Any further thoughts would be appreciated.
Your question from the prior post was:
>>I suppose this would be akin to a designer's charging for page templates or a lawyer for boilerplate contracts. Is there established practice on how to arrive at charges?
When I used to put together contracts for clients, I usually was able to modify a basic contract I had on the computer. I charged a fee that would entail the amount of time it took to insert terms specific to the client, the time spent modifying 'standard' clauses, the time it took to print and re-edit, and the time it took to go over the contract with the client.
This amount of time is fairly easy to estimate and I usually quoted a flat fee up front.
Lawman perhaps should have pointed out that while his fees seem high, most of the money is not his to keep.
For a start he might only be able to bill for half the hours he is actually working. Then the fees must cover the rent of his office, phones, lights, equipment, wages for a secretary, insurance, tax, accountant's fees, legal books, professional memberships, etc etc etc.
If he takes a vacation those overheads still need to be paid.
I have heard people say "I charge $X for html and $XX an hour for database work."
That is silly. You are still the same person.
A plumber is going to charge so much an hour whether he is bending pipe or digging the trench to put it in. An hour of your time is an hour of your time.
Still another FWIW link - just so you can see a simple employment agreement that I use, go here [duiguy.com].
I will leave this link up until March 4, 2002 at which time it will be removed.
Keep in mind that I am only putting this up for purposes of illustration. I do not see any direct application to an SEO contract and I am not recommending that you use it.
P.S. Right after I put the page up, my server went on the blink. Grrrr. I'll call the host.
<added> The host said a router upgrade was in process and I should be down just a few minutes.<added>
There's also a difference between employment, work-for-hire and independent contractor status, particularly important with copyright issues.
I'm wrestling with this very issue right now, dealing with a couple of entirely different markets and different types of work structures. Just had to explain n a long email the difference between straight seo, straight design and a combo of both. Enough for a few pages worth.
Thanks so much Lawman, good info is very helpful. More than you'd know, unless you've dealt with newbies to web sites. More than you'd *want* to know unless you had to. :)
I agree with the idea of an hour is an hour regardless of what is being done. I personally dont care if I am making tables in notepad or designing a database, I charge the same on a per hour basis.
Regarding hourly, there's a difference between the level of preparation and research, relative value of the skill-set and the knowledge and experience involved for different types of work.
There's also a difference between task performance and consulting. It may take 15 minutes to tell someone to change something on their site and why, but it may have taken 100 hours or ten times that to be able to know in the first place that they'll get banned from search engines for what they're doing. In a case like that they're paying for the value of the information they're getting, but the COST to the provider has to be measured in terms of what it's taken to be able to provide the information.
In my day job, it takes me much less time to prepare a case than it does most other lawyers (has to do with experience, ongoing research, continuing legal education). Yet my fees are, as a rule, much higher. Goes back to level of experience, reputation, and how much an individual market will bare (my fees are significantly higher in Atlanta metro area than in South Georgia).
A lot depends on the market you are aiming for. If you went to a Mercedes dealer and said "That's too expensive" he would reply "No, you just can't afford it"
You don't have to work for nothing just because some client says he can't afford to pay more. That's his problem. Look for a better class of client.
>>Look for a better class of client.
LOL. I believe that my clients are the Mercedes of the criminal world.
I meant web clients, not law clients, but say, what's a lawyer doing slumming with us down-at-heels web bums?
That's like a dentist having a part time job selling Avon products.
|what's a lawyer doing slumming with us down-at-heels web bums? |
Not everybody does business just because they are in for money - there are many (and I mean many) people in this world, who get involved in activities related to their hobbies, and if by doing so, they make some money (or more money :) ) there is nothing wrong in it.
Also, do you know that a person working on something becuase of interest is more likely to produce better results compared to someone working just for making living.
Yeah, well, I used to be a photographer before I got my first computer. It was love at first sight.