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Need business advice
This one has me on the fence
BBCMember

5+ Year Member



 
Msg#: 3715398 posted 6:49 am on Aug 5, 2008 (gmt 0)

I have a situation that is a bit unique. A colleague of mine approached me to do a website. I was a little reluctant, but I said I could build a website for them via a Wordpress template. So, they agreed.

We originally had agreed on a 6 to 7 page website, and I guesstimated it would take around 11 hours of work (they wanted me to customize the template that they bought, as well as add many features), and I stated that if it took less, I would charge them less. I was charging hourly.

Well, as time went on, they kept on adding more pages and more features. At about 16 hours into it, I let one partner know that we were at 16 hours already, and that did not include the work that I was doing that day. They said OK.

Then the other partner contacted me and said they had heard that we were already at 16 hours, and that they wanted things itemized so they knew what they were paying for. They also had suggestions for doing the project in stages and outlined the stages.

I responded saying that we were at 16 hours when I started the day, and that I had already worked 9 hours that day, which would put the total at 25 hours, which is more than double what the original quote was. They did not respond back. So I assumed things were fine.

I was in constant contact via email with the partner that said OK to the hours. So, they knew how much more time I was spending on the project.

I received 50% of the original quote at the beginning of the project, and the deal was I would receive the other 50% at the end of the project. However, since we had gone way over the original amount of hours forecasted, the second payment didn't even cover the first 50% of the cost of he project.

By the way, the day before I let them know that we were at 16 hours, the one partner that said OK to the hours was constantly asking when we would go live, even though they constantly kept on adding to the project and modifying it.

Near the end of the week, the one partner that said OK to the hours sent me the second payment via an online service early in the morning, even though we had not discussed it, nor had I finished all of changes that needed to be made. That was a red flag to me.

They again asked that day when we would go live, and I stated that I could not go live until I received the final payment. They got upset and acted insulted, even though they had agreed to that policy via email earlier on (who gives the product before they get payment, especially when dealing with a client who is in a different country?). I stood my ground.

I finished the modifications at 7:30 that night, and at 8:50pm the same night, they wanted an invoice. I emailed them the next morning and stated that I needed to know that we were finished with the site before I sent an invoice.

They first sent an email with concerns about the transaction, and then stated that were were finished with the site for now. So, I sent the invoice back along with an email addressing all of their concerns. The site ended up being a 15 page site with many more features than originally agreed upon, and numerous modifications. Because of that, the price that was 5 times the original estimate.

I did not hear back from them right away. This went on for a week and a half. Most likely, this was a money issue. I still had the test site up so they could refer to it and test it. I then got some emails from the test site notifying me that people had signed up for their products/services via the test site.

Some of the features on the site allowed visitors to sign up for things. So, since they kept on prolonging the final payment (even though they had put a lot of pressure on getting the site up asap), I assumed that they were using the site as their site for now and were telling people to check it out and sign up. So, I disabled it and sent them an email telling them why.

They emailed back and said they were insulted, and that they needed more time to look at it. I spoke with a friend, and they suggested that I just put it back up for a certain period of time for them to look at it and test it. I was very reluctant in doing this, but I eventually sent an email to them stating that they had 72 hours to view and test it.

They then wrote back and said they wanted to break up the time, and use half of that time starting now, and the other half sometime during the coming weekend, which was a week away.

I emailed back stating that I usually only give 3 days for final payment, but had given them a much longer grace period. I stated that I could not let it go into the weekend, nor could I break up the time period.

Well, then the person who had OK'd the hours called up and was quite upset. They reiterated that they were not happy at all that the test site had been taken down, and that they needed more time to look at it. Keep in mind that they had already had a week and a half to view and test it, and had already OK'd it the way it was. All they needed to do was test some of the features, which would take no longer than 1 hour, if that.

But they insisted, and even went further than that by saying they were insulted that I would accuse them of doing such a thing, and that there would be "repercussions" (Huh? Repercussions? Are you serious?). I did my best to compose myself, but I did slip a couple of times, as it had been quite a challenge dealing with these people.

They kept on stressing the fact that they wanted the test site back up so they could look at it more and test it (even though they had OK'd it and wanted it up the way it was now). A friend of mine told me to just put it up, as it was quite a bit of money, and both sides wanted to conclude the transaction quickly.

So, reluctantly I put the test site up and let them know they had 72 hours to view and test it. Well, the next day I received an email from the other partner stating that they had looked over the site and that I could disable it. They did not even test the features (I would have received notification).

What they did do was send back the invoice that I had sent them and tore it apart, saying that they thought that it did not take nearly as long as I had stated. They slashed the amount down to 1/3 of what the invoice stated. My invoice was completely accurate. I did not list every single technical move that I made, as that would be tedious and take too long to do.

I emailed the partner that had OK'd the hours and said I would only deal with them, as they were my client. The other partner was just the first partner's romantic partner with some business ties, but this was the first partner's business. I let the first partner know that the invoice was completely accurate, and that if full payment or a partial payment towards the total were not received by a certain time and day towards the end of the week, that legal action would be taken.

The thing is, they are in Canada, and there was no formal contract between us. Only emails back and forth outlining the terms as we went along. I know this is not the way to do business, but we were friends/colleagues, and they got touchy when I first brought up the business side of things.

What happened next really surprised me. On a hunch, I took a look at their domain, and I then realized why they wanted me to put the test site up again. They wanted to get the content so they could put it up on their domain. They had grabbed all of the images and text, changed the template, and put up the content on their domain.

This blew me away. They were insulted that I had accused them of using the test site as their site, yet they then go and steal the content from the test site and put it up on their domain? How is this congruent?

All of the pages are not up on their domain, however, as the navigation bar of the template that they are using does not allow that many. Also, they don't have any of the features that are on the test site.

This gets a bit sticky, because the content consists of text that they wrote and images that they had originally created in an MS program that I captured and made web ready. So, the images were not entirely of my creation.

Basically, they put up most of the pages on their domain, even if the content was taken from my test site, and they have 5 less pages than the test site.

We are now into the next week. I have received 1/5 of what they owe me.
I have not done anything, as I have been contemplating the pros and cons of taking action. We are in another business together, and they had done something that is not allowed in that business.

I could use that knowledge to my advantage, and use it as leverage to have them pay for the site. I could also let them know that if they don't pay, I will let everyone know in the business we are in together how they have acted during this website transaction. Since this website is for a business whose main prospects are in the business we are involved together, that could be quite detrimental to their business.

I could also let another colleague who owns a site that they would use to get business from know that they had done something that is not allowed, and it was done via this colleague's site, which is even worse.

However, I don't really want to go there. It's a fair amount of money, but they may not have it, and it could be seen as borderline blackmail. I'm just not that kind of person unless I really have to be. But this one has me on the fence.

So, the question that I have after this very long post is, what would you truly do if you were in my shoes?

TIA

P.S. Thanks for taking the time to read and answer this post.

 

BeeDeeDubbleU

WebmasterWorld Senior Member beedeedubbleu us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3715398 posted 8:28 am on Aug 5, 2008 (gmt 0)

Having been in similar situations in the past I would suggest that you may be better to take this on the chin and put it behind you. Legal action is probably not an option since you had no formal contract so there's no point in getting any more upset about it.

However, I don't really want to go there. It's a fair amount of money, but they may not have it, and it could be seen as borderline blackmail. I'm just not that kind of person unless I really have to be. But this one has me on the fence.

If it were me and they continue to refuse to pay you I would put the friendship behind me and take the action you have suggested. They have clearly shown that they have no respect for your friendship by being totally unreasonable in their expectations.

The problem is that you were working for an hourly rate. This is always risky. I would suggest that in future you clearly specify what you will be doing for the client and put a fixed price on it. Make it clear that any further work that is requested will be extra. I do this all the time and on most occasions it works for me. Sometimes the work takes less time than I estimated, sometimes more but it works overall.

What I do is send prospective clients a detailed proposal with the work being clearly specified and ask for a 50% advance. I also attach a copy of my terms and conditions and explain that paying the advance indicates that they are accepting the terms and conditions. These T and Cs have been developed over the last seven years so they cover most situations.

Incidentally I am no clever dick. I learned the hard way and I have had to deal with similar situations in the past. When it happens I do what I can to resolve it but if I can't I take it on the chin and amend my T and Cs to cover the situation in the future.

ksumit81

5+ Year Member



 
Msg#: 3715398 posted 9:08 am on Aug 5, 2008 (gmt 0)

Never mingle friendship with business, You are paid for your efforts dear, if you have worked on other project for that long hours you might have earned few bucks. if not worked even have been slept calmly and precious hours would hv not ruined by these ***##*.

Nicely suggested by BeeDee always go for a full time contract and not the hourly work style.

But bro i will suggest you to skip this matter, why get mental stress, but no favors for cheats in future..

BBCMember

5+ Year Member



 
Msg#: 3715398 posted 5:45 pm on Aug 5, 2008 (gmt 0)

Yes, I do think a full contract would have been better. However, they kept on adding things as time went on, and they knew they were paying by the hour. I would have had to revise the contract 15 times.

BDW, first you mentioned to take this on the chin and put it behind me, and then you said that you would take the action that I suggested. It's kind of an either/or thing. So, would you do nothing or take action?

Some others told me that if I took the action that I suggested, that it could open me up to defamation of character. However, that would not be the case if I just let them know that I would do that if I didn't pay.

Thoughts?

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3715398 posted 6:08 pm on Aug 5, 2008 (gmt 0)

What happened next really surprised me. On a hunch, I took a look at their domain, and I then realized why they wanted me to put the test site up again. They wanted to get the content so they could put it up on their domain. They had grabbed all of the images and text, changed the template, and put up the content on their domain.

When I first read that they wanted the site back up for "testing," my immedaite thought was "Don't do it- they're just going to grab the content and images." When they said you could take it back down after an hour with no testing, that pretty much confirmed to me that's exatly what they did.

We are in another business together, and they had done something that is not allowed in that business.

As you are part of that business (in what capacity, you don't mention), if/when the issue comes out, can you be liable for it from being associated with them? If so, then I think your actions on that issue should be completely independant of the first issue.

Regardless, given their actions with the first issue, you should disassociate yourself from that business relationship as well. (That's why working wih friends and relatives is often a bad idea- when problems arise in the business, the issues spill over into the other relationships.)

Although it may be difficult to just take it on the chin and walk away, that's probably th ebest advice. Making things ugly can burn bridges down the road. Although the money may sound like a lot right now, you also have to put a value on your time in the present sense and factor how much it will cost you to fight (and still possibly not win).

And since it's you as an individual going up against a partnership, it's not a "he said vs. she said" issue, but rather "he said vs. they said" issue, and the majority tends to win in those cases.

Put it behind you, but take some valuable lessons from it:
1) Never work without an explicit signed contract. And stick to the contract.
2) When working with partners, designate one person (on each side) who will be responsible for authorizing changes. (Otherwise, you run into the issue of someone giving you permission to do something when he/she did not have the authority to do that.)
3) When you start getting into problems with payments, discontinue all future work until the issue is resolved. I've seen it time and time again (first hand and second hand)- 99% of the the time, work from that point forward will never be reimbursed.

BeeDeeDubbleU

WebmasterWorld Senior Member beedeedubbleu us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3715398 posted 7:08 pm on Aug 5, 2008 (gmt 0)

BDW, first you mentioned to take this on the chin and put it behind me, and then you said that you would take the action that I suggested. It's kind of an either/or thing. So, would you do nothing or take action?

I do not know enough about the facts of the case to comment any further than I have done. All I am saying is that there is little chance of you taking legal action and unless you do you have to take it on the chin.

Doing so does not preclude the retaliatory action you suggested. This would not get you the money they owe you but it would probably give you some satifaction. (I think it's called revenge.) ;)

BeeDeeDubbleU

WebmasterWorld Senior Member beedeedubbleu us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3715398 posted 7:22 pm on Aug 5, 2008 (gmt 0)

When working with partners, designate one person (on each side) who will be responsible for authorizing changes.

This is good advice. I recall about three years ago I did a website for a company, which had three partners. The one that dealt with the commission was fine then another one got involved. He was saying one thing and the other guy was saying another. I was left trying to dance to two fiddler's tunes.

Eventually I told them I could not work like this and asked them to nominate a contact for the job. After this it was fine. One job - one point of contact!

aspdaddy

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3715398 posted 9:34 pm on Aug 5, 2008 (gmt 0)

>1) Never work without an explicit signed contract. And stick to the contract.

Or just learn to manage client expectations, projects and scope creep effectively. There is a time and a place for explicit signed contacts and 11hr guestimates arent one of them.

If you insist on holding customers to detailed contracts with no room for concessions you wont be in business for too long.

BeeDeeDubbleU

WebmasterWorld Senior Member beedeedubbleu us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3715398 posted 7:32 am on Aug 6, 2008 (gmt 0)

There is a time and a place for explicit signed contacts and 11hr guestimates arent one of them.

I think the fact that BBCMember started this thread is conclusive proof that it is. This problem started with an 11 hour guesstimate.;)

Or just learn to manage client expectations, projects and scope creep effectively.

Isn't that what contracts are for?

If you insist on holding customers to detailed contracts with no room for concessions you wont be in business for too long.

I have been doing it for six of the last seven years and I do OK. I do make some exceptions for previous clients that I know are realistic when it comes to paying for the work I do for them.

I may have lost a job or two here or there because of my terms and conditions but they are very transparent and fair. The way I see it is that if anyone does not like them then they may be trouble anyway. ;)

Fortune Hunter

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3715398 posted 2:42 pm on Aug 6, 2008 (gmt 0)

The thing is, they are in Canada, and there was no formal contract between us. Only emails back and forth outlining the terms as we went along.

The fact that they are in a different country from you will probably cut down your legal recourse in a serious way. I am guessing the amount of money we are talking about here is a small claims court issue. Filing a claim in the U.S. can be time consuming and a distraction to other business and projects. However trying to do it in another country has nightmare written all over it.

You may be able to file in the U.S. but collecting a judgment from a U.S. company is pretty difficult, trying to get it out of people not in the U.S. would be far worse. If you end up having to file in Canada now you have a whole new set of problems on your hands in terms of learning your way around the Canadian legal system.

If you insist on holding customers to detailed contracts with no room for concessions you wont be in business for too long.

I completely disagree with this. I have used detailed agreements for years and also do pretty well. My contracts are not long legal documents, but rather simple agreements that spell out what you will get with some degree of specifics to stop scope creep, my price, estimated delivery date, my payment terms, and a couple of basic disclaimers if I think I need them and a place for them to sign. If there are changes down the road I write up a simple work order addendum and send it to the client asking for a signature. It takes all of about 15 minutes to do this and works very well.

Also I only ask for the addendum if the requested changes are truly time consuming, it if takes me 15-30 minutes to add their request I will typically just do it the first time. If it becomes a habit I throw out an addendum.

Although it may be difficult to just take it on the chin and walk away, that's probably th ebest advice.

I would agree with that as well. In economics we call this the opportunity cost, which basically says how much is it going to cost you to pursue this issue in terms of the other work and projects you could be doing to make more money and move on. I have been there, I know how hard it is to walk away. I have had one person in 5 years stick it to me for a fair chunk of money and I wanted to go to war, but had I done that I am confident I probably still wouldn't have received the money, burned some bridges that have produced a lot more income over the years and wasted a bunch of time in the process.

My advice is to simply disassociate yourself from them completely and move on to more profitable projects. You will be happier in the long run even if you don't think so right now.

HugeNerd

5+ Year Member



 
Msg#: 3715398 posted 7:45 pm on Aug 6, 2008 (gmt 0)

I do not do the progamming side of things and am rather out of touch with invoicing for this side of my business. However, the company I contract with has a system which works very well for us (and, I assume, them). I get a rather concise document with the project plans and the total value of the work. They put a maximum number of hours for the project--essentially how many man hours they believe it will take--and we are both somewhat beholden to this time limit. If it takes them 80 hours when they quoted it at 40, we discuss resolution. Usually, I pay for half the difference and they eat half of the cost for misquoting. If it only takes 20 hours, well, I don't usually see much money returned :o) However, if I agree to their quote and the timeframe for completion and pay upfront, they discount the total payment by 25% at invoice. I'd say there is excellent incentive for both of us in their scheme; they make sure I am serious about my desires and reward me for being decisive. They get to invoice the work immediately and cross me off the accounting sheet as paid. Or, should I be of the opinion they are overquoting, I can pay at completion (minus the 25% retainer) and pay only for the work completed.

I know they do not offer the 25% discount to all customers; only those with a history of paying their bills.

In economics we call this the opportunity cost

I'd also consider your return on investment. Do you stand to make money for yourself by chasing backpay? Let's say you have put in 20 hours at $xx/hr. Now you have to put in another 20 hours...you have cut your hourly rate in half. Get another project lined up, change your payment terms, take a downpayment (25%? 50% of total? any industry standards?), invoice immediately, and you're back at $xx/hr as opposed to ($xx/hr)/2 regardless of how you determine total project value.

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3715398 posted 8:03 pm on Aug 6, 2008 (gmt 0)

If you insist on holding customers to detailed contracts with no room for concessions you wont be in business for too long.

Been in business for 8+ years- I would consider that long. Especially in Internet years.

The only major problems we've had came from when there were NOT detailed contracts.

Or just learn to manage client expectations, projects and scope creep effectively.

Isn't that what contracts are for?

Exactly! You can reduce an incredible amount of time wasted from managing scope creeep with a well-defined contract that everyone understands and agrees to.

Like FH, I'm not completely rigid- I'll allow some leeway for some 1-time quick changes. But if the changes become neither 1-time nor quick, it's time to put the foot down. And it's much easier to do that when you have your well-defined contract to refer to and show why it is outside the scope of what was agred to.

StoutFiles

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3715398 posted 8:33 pm on Aug 6, 2008 (gmt 0)

They only got the client side code right? Hopefully the site has enough server-side code that it's prartically unusable to them.

Look on the brightside...you didn't have to come up with a completely original design since it's Wordpress. You know now to always write up a contract...sorry but nobody can be trusted in business. And hopefully, what you did design you can use for other projects in the future.

If I were you, I'd never do business or even communicate with these people again. Be glad you even got some money and move on. Don't blab about what they did unless somebody asks.

Demaestro

WebmasterWorld Senior Member demaestro us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3715398 posted 8:43 pm on Aug 6, 2008 (gmt 0)

Your first mistake was not the lack of a detailed contract. It was the lack of a detailed specifications document and not sticking to said spec document that really hurt you. Spec creep is real and clients are almost oblivious to it and can't fathom how "just adding a delete link can take so long"

5 pages should = 5 pages.
4 features should = 4 features.

Friend or walk in off the street the one document I won't work without is the spec and mine is written in stone.

Knowing that spec creep is inevitable I always create two documents for my spec, one called "core functionality" and another called "Features list"

The core functionality is what they come in asking for. The Features list starts blank. Every time I get a call from a client that starts out like

"You know what we just thought of..." or "You know what would be cool"

I pull out the features list and say..

"that sounds great, let's add it to the features list."

Everything is based on the core functionality list, the deadline, the budget... everything.... I make it clear that I don't touch the features list until core functionality is complete.

Once I launch with core functionality I pull out the features list and estimate each one at a time and allow the client to prioritize it and decide which features they want first.

Had you avoided the spec creep you would have finished on time and on budget and you would find it much easier to ask for $x.xx to add in some of the additional features after.

I have been burned too many times and this method more then a detailed hardassed contract has saved me the grief.

Because I never deal with spec creep during a project, I am always on time, always on budget, and I always get more $$ in the end cause that feature list is always growing.

[edited by: Demaestro at 8:48 pm (utc) on Aug. 6, 2008]

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3715398 posted 9:21 pm on Aug 6, 2008 (gmt 0)

(Never mind- wrote something that just confused the issue.)

[edited by: LifeinAsia at 9:22 pm (utc) on Aug. 6, 2008]

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