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How to charge for this project?

Small business, good for the money.

     
7:44 pm on Aug 11, 2003 (gmt 0)

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I develop a website for a small company in town. They've asked me to re-design the website I originally built not too long back because they've had a sweeping change of colors, methods and priorities.

Except they needed a temporary page to explain a few items while the new site is being built. It isn't much information but was enough to take about 12 hours worth of time and some research.

Now, should I wait and bill for the entire project or send an invoice for the work done so far. I'm asking what you might think would be in my best interest. I know and trust who I'm working for so I'm not concerned about not ever getting paid...

Any advice is appreciated.

M

7:49 pm on Aug 11, 2003 (gmt 0)

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If they're friendly, why not ask them? They may prefer to keep the two things separate for their accounts, or they may dislike getting enormous invoices...
8:44 am on Aug 12, 2003 (gmt 0)

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I generally send invoices on the 1st and 15th and bill for any work done up to that point. It annoys some clients but the larger ones appreciate it because it breaks up their payments so they aren't hit with a huge bill.

It also means there is a pretty steady stream of revenue. I used to only bill on the first of the month with payment due at the end of the month but was finding that if I had a rash of clients pay a few days late then my bills got paid late.

8:20 pm on Aug 12, 2003 (gmt 0)

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Thanks for the replies, I really like the idea of billing them on the 1st and 15th jmbishop. Of course, at the moment it isn't steady like that. For ie., I've developed a temporary page. The 'main' site work might not begin for another two weeks.

The way I've charged for sites fo far has been 50% up front, and 50% when finished. Plain and simple.

Hourly might be the way to go though...I guess I'll have to experiment.

Thanks-

9:03 pm on Aug 12, 2003 (gmt 0)

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> why not ask them?
>> I generally send invoices on the 1st and 15th and bill for any work done up to that point.

:) I ask them their preference, but suggest billing on the 1st and 15th for the same reasons mentioned in the above post.

An advantage to asking is that you get their buy-in - and if you ever have billing issues you can remind them: "Per our conversation on June 20th, we agreed on such-and-so."

9:07 pm on Aug 12, 2003 (gmt 0)

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cash flow, cash flow, cash flow...
9:37 pm on Aug 12, 2003 (gmt 0)

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cash flow, cash flow, cash flow...

I like the sound of that.

11:15 pm on Aug 12, 2003 (gmt 0)

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> why not ask them?
>> I generally send invoices on the 1st and 15th and bill for any work done up to that point.

One of the main problems I will have up front in this scenario is hourly billing. I've always billed 50% up front and 50% upon completion. Is it possible to jump into an hourly scheme without prior tracking?

What might be some methods for figuring an hourly? If I billed in the manner described above, it needs to come out as close to the amount I would have a originally quoted, that seems difficult without knowing how much is decent to charge by the hour.

That make sense ;)?

6:50 pm on Aug 16, 2003 (gmt 0)

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One of the main problems I will have up front in this scenario is hourly billing. I've always billed 50% up front and 50% upon completion. Is it possible to jump into an hourly scheme without prior tracking?

I need to build a pricing structure and I'm trying to come up with an hourly rate. Does this formula make sense or is it rubbish?

I take account of (1)my basic expenses for the year (rent, food, gas, lights, dog, etc)...

I then take my (2)annual expectations and multiply that by what (3)percentage I owe the company I work for.

After that I divide by year/month/week to yield the hourly rate. A made up example below:

1. $24K
2. $72K*.30
3. $21,600
-->$72K+$21,600

$93,600/12/4/40=48.75/h

Would this be considered competitive, or something I should base my rates off of. I understand the need to be flexible and estimate how the market is, but I'd just like to have a standard plan.

Brutally honest works for me- thanks.

8:26 pm on Aug 16, 2003 (gmt 0)

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Also, is it normal practice to charge different hourly rates for different technologies. Like $25 for HTML/JavaScript and $50 for Database Integration?

Or do you tend to just pick it and stick to it :).

10:38 am on Aug 17, 2003 (gmt 0)

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I think that's the right track madcat. But consider this as well. When you're self employed you have some additional costs like taxes, insurance, computers, phones, etc; and also take into account that not all of your time is billable. You're going to spend time doing sales, networking, education, etc. So intead of, say, 40 billable hours per week you might only have 20 or 30. So take your desired annual income (factoring all your expenses) and divide it by the number of billable hours.

As far as charging two rates, I don't. Though I had an accountant that charged one rate for himself and a lower rate for his assistant. I think of it like this. You are an employee of your own company. Someday you may want to hire someone to do some of the work you are doing now. In that instance you'd need to bill enough to cover their salary + your contribution in taxes and insurance, plus some profit for you. Rule of thumb is to bill someone out at 2-3 times what you're paying them to cover overhead plus leave a profit. Even though right now you are the employee I'd still look at it in these terms.

1:25 pm on Aug 20, 2003 (gmt 0)

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Hi Madcat:

Right then: Tack the 12 hrs onto the 50% downpayment (you haven't got that, right?) If the work is going to start in 2 weeks or so - send it now.

End of story. Make it clear you can't do anymore work 'til you get the first downpayment.

Stage Two: If they aren't ready to start - in 30 days, or 60 days, just send them an invoice for the initial 12 hours. Deduct it from the other invoice.

BIG HINT - split the LAST payment into 25% and 25%. I haven't and have regretted that in the past - you can keep to schedule but the client likely won't (they're busy!) so if the project goes even a little bit long... and you're waiting for payment... your bills don't get paid.

I've said it before - I'm not big on hourly rates. I think it slows people down, puts the focus on the wrong elements. We don't do line-by-line breakdowns, either. Just a description of all the things done, with numbers ("45 graphic elements") and the set fee.

 

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