Maintenance Contracts

How to set them up

[Fortune Hunter]

In an effort to find ways of bringing in continual streams of income to my design business I am thinking of setting people up on maintenance contracts. I want to do this for two reasons. First, it will give me a little work each month and with enough clients that would add up. Second, when they need site overhauls I am first on the list to get the work because I have been maintaining the site.

Here is my questions for those of you already doing this...

1. Do you charge a fixed fee every month for maintenance and give a certain amount of work back? Or do you just set an hourly rate and charge that for any work in a given month?

2. If you do the former what is the monthly fee and how many hours does that buy? Is the rate cheaper then you regular hourly rate?

3. How do you justify it to the client on the months where they don't have any changes to make, but are still paying you a fee?

4. If they are on a contract what does the contract say?

5. What is the approach you guys use to sell this to the client?

I had a potential client tell me they were interested in a maintenance contract and wanted me to write something up. I didn't know what the best way to even tackle this was so I haven't done it yet.

I like the idea of a fixed monthly fee for a certain amount of work each month, but I just don't know how you justify that when no work gets done in a month and I imagine you wouldn't want a client saving up all his hours and asking you do a ton of work at the end of the year.

Any thoughts from those of you actively doing this would be very helpful.

Fortune Hunter

[iamlost]

Never do any work without a contract. Never rush writing a contract: it is not something you want to have second thoughts about.

The word you are looking for is "retainer". I charge a weekly retainer (billed monthly in advance of service) that covers a specified effort for each of the specified activities (for example: edit and upload 2-pages new content per week).

A retainer is non-refundable in part or in whole. If there is little or nothing that needs to be done one week then that weeks retainer is gravy. On average I do about 85% of a retainers specifications in a week (I track these carefully to help with contract renewal).

I do my utmost to stay away from quoting "hourly" rates/activities because it can lead to differences of opinion in how much of what should be done in a time period. It also forces both the client and myself to take the time to understand the sites real requirements.

My contracts state that any activity different from those specified are additional and will be quoted, signed for by the client, and billed separately. For example: the client wants to add 10-pages of content one week - the additional 8-pages will be quoted (and the client must sign acceptance prior to work commencing) and billed separately.

My charges vary depending on client/work required/etc. so amounts are difficult. Take the time to set out all your charges before you ever talk to a client. Try to minimize the number of charges, for example I have four basic hourly rates: site design/build/maintain, optimisation/marketing, programming, and database. There are several threads here at WebmasterWorld that discuss setting charge amounts.

When bidding on a contract whether new site or renovation or maintenance or whatever I work out the time for each "rate" involved and do my arithmetic plus some cover and quote a total amount. This is hard to do well without experience (and even experience can be wrong) which is why many people like to work by the hour. I hate it because many clients use opposing hourly rates to whipsaw contractors.

I do not provide breakdowns - I am a contractor not an employee.

[henry0]

5. What is the approach you guys use to sell this to the client?

$Talk
I will charge slightly less for a given work and offer the first maintenace year for free as a value added token of recognition.
if maintenance will be added on CONTRACT

Very important:
Define maintenance

Even more important
Define payments terms and when maintenance is kicking in
For example my first year is part of the initial deal
then the maintenance contract shall kick in

Regards
Henry

PS)
I have been "burned" with such contract
in such a case review a thread we had a while ago
(sorry do not remember where it is!)
titled "When should we drop a client, or something similar.

[Fortune Hunter]

Both of you guys have some good stuff here, let me ask this, what is the amount of work that falls into maintenance as opposed to site building? i.e. 3 pages per month? 2 pages per week? etc.

Also when calculating maintenance based on pages per time period how do you account for the extra stuff that goes into a page like the graphics and pictures. I can see a situation where the client wants his two pages for the week, month etc and wants a pictures with all kinds of treatments or special graphics that take a bunch of time to complete.

Also I know others have talked about amounts to charge, but I need a starting place here, what is considered fair pricing when doing it by the page as in a maintenance contract?

Fortune Hunter

[Lvanhoff]

I charge a flat fee for the site design, usually a minimum of $5000 for a basic site up to $10,000 for a more complex site. But I must say all of my sites are prety simple. I don't do any programming or databases. I tend to serve small businesses who are either just gettin onto the web or have a terrible site a relative did for them. Once we have clearly established what they are wanting for the site itself, I tell them it's important to also sign up for my quarterly search engine maintenance contract. For $900/quarter they get a monthly ranking report emailed to them (Web Position), I review their traffic reports (which I insist they have) and I make any minor adjustments I think need to be made to the site to increase rankings. For regular maintenance, like additional content/graphics it depends if it's just little stuff (for which I charge $80/hour and people seem to like to know they have that flexibility down the road) to flat rates for additional projects.

I hope this helps. Most of my customers are now on my quarterly maintenance program. Those that weren't at first because they didn't want to spend the money came around when they realized their rankings were dropping without any effort to boost them. I also often charge a $2500 marketing package which is building links, finding opportunities to get visible, and a more intensive search engine optimization.

I have always just been guessing at how to structure this. Most customers like it but some complain it's too expensive. But it really only comes out to 3.5 hours a month (if you take my $80 hourly rate)which seems about right for these straightforward sites.

I sell them by saying reminding them that paying to have a web site designed and optimized on the first bounce is only half the game. The second part of the equation is to monitor/adjust/boost rankings and repeat monthly to build up consistently high rankings and traffic. My customers seem to like this and I think like it that they have a web marketing person to bounce stuff off of and work with. They are mostly far too small to have any kind of marketing department so they see me as a valuable addition and the quarterly maintenance seems to make them feel like they have me on retainer for questions and such. It keeps me involved. As you said it keeps me front line when the site needs a revamp. I've been doing this for 5 years (my prices have gone up, I started at $750 for a web site) and over time it's the same customers that use me for their new sites and refer others to me.

Hope this helps!

[Lvanhoff]

I hope it's not completely inappropriate to talk about how much is charged for what...I think it's helpful to have a sense of what other people charge as there is such a diverse range.

I also always tell customers that it seems silly to spend the money on a website and then not give it the ongoing effort it requires to be successful.

I'd be interested to know what other people are charging and how they structure their ongoing maintenance.

[henry0]

Hello Lvanhoff

Seems to me that you are a top marketer person
that kind of $ for non dynamic simple sites is not what any small biz around (In my neck of the wood!) will pay for

Would you please depict one basic site

all of my sites are prety simple. I don't do any programming or databases.

Regards

Henry

[Lvanhoff]

Do you mean give you the link to it or tell you about it? Is ok in the forum to give links?

[henry0]

We cannot post those kinds of links

Sorry if I was not precise enough

I am trying to figure out what would be (roughly) your typical content and page layout description in a similar way that you will describe your site in "lemon terms" to a non-tech person. Another word if I was a client what do I get for 5 to 10K

Thanks

Henry

PS) please understand that I am looking to criticize
Just questioning myself if I can get more for what I do, which is relying on DB and PHP scripts

[Lvanhoff]

Henry,

I have a range of sites in that price range but they are mostly 10-20 pages sites. They all sell something so have a shopping cart. I've optimized them all. I've done all the graphics/some flash. One site is 266 pages and a about 700 items for sale but that one got a big discount as it's a friend. For the most part, they are 10-20 pages with no database/custom programming.

[henry0]

Lvanhoff, thanks
I did not release that your sites do offer an E-commerce section
Now I understand better your price policy when factoring the E-comm and SEO tasks

I like making things working together but for some reason (I know that I am wrong!) I cannot dedicate myself to fully develop the SEO segment

Regards

[Lvanhoff]

But you know, I always use the example of "why build the house without wiring to have to go in and hire someone later to add electrical wiring?" since SEO is so important to any site. Even if you just give it a round one kind of SEO nod...make sure it is built to please search engines, modify text and tags etc...it makes such a huge difference in the site's success on the first bounce, which really does justify charging more. I use the fact that I do both and it's an integrated approach to their site's success as a sales tool and it's really true. There is nothing worse than working with a furious client whose original designer made them invisible to search engines and then I have to start over. I'm sure you do some of it anyway...but I find that the basics of SEO are so simple to build in carefully that you can charge more for it and truly do them a huge favor for it for the life of the site.

[henry0]

Indeed I do my best about it when dealing with my own sites or clients’ sites

What I did mean is related to market that segment as a new offering added to my original palette of offerings

Another word I am not interested in embarking on SEO tasks for existing sites unless the site pertains to an existing client

Why: I like to be able to see immediate results
A SEO job will take a few months before bearing fruits
SEO is somehow too abstract to please my Cartesian mind :)

Now to be back on the contract subject
there is another aspect that we have not yet discussed:
What will be the correct action to take if a client signed a maintenance contract in order to benefit from some added values
and then when the contract is kicking in refuse to pay
or simply ignore your payment request?

Henry

[Lvanhoff]

The way I handle the payment issue is I require payment at the beginning of the quarter. So they pay $900 which covers the next 3 months. Because they trust me from the site building experience they trust me to give them $900 work over the quarter. I did have just one customer who after the first quarter did not renew the maintenance contract but I was not out anything because he had paid for the first quarter in the first month. I was disappointed though because his results for the first quarter weren't bad but the traffic was not converting to phone calls (personal injury lawyer...phone should have been ringing).

What do you do when the results are not as they should be for a site? On the one hand I feel it's my responsibility to have them ranking well within the first quarter and the phone to be ringing. On the other hand, I've built them a site they are happy with, it's ranking decently for first quarter, then there is an argument that one in my position should be paid a separate amount of money to do the marketing part of it.

Do you ever have that conundrum? What are they really paying for? A tasteful working site or a tasteful working site that makes the phone ring?

May I ask what your "original palette" of services are?

As much as I love my own business, I am really wanting to branch out to my own income generating sites so that I am not SO dependent on customers.

Laura

[henry0]

Hello Laura,
My range of offerings consists in developing sites
By using Web architecture including content acquisition, focus group and everything in between
Then I supply a few drafts made out of printed pictures depicting (roughly) the new site
in addition I supply a navigation map.
Next step:
Build a few indexes and inside pages template served out of a demo server area
Review, get client’s feeling and move forward to dev.
I offer sites that are OOP editable templates, with a client side editor that is, as I like to mention “If you can use MS word; you can use my editor”
Sites are built using PHP and MySQL
On another hand I am also a Food and Beverage consultant specialized in high end or in another direction specialized in everything that is farm related.
I have as a direct result a few clients in that range but mostly I have clients in the small biz category
Further I am bi-lingual English and French
(Yes I know my English grammar sometimes goes out of sync!)

Asides I developed a script that allows building a new web out of a few clicks and edits, it targets small biz and I am presently launching the concept

I have a few more ideas but being a “one man operation” does not help

Regards

Henry

[Lvanhoff]

So your services are very sophisticated compared to mine. I follow roughly the same process but with Dreameaver. I've never bitten off the PHP MySQL bite. I am absolutely envious of your ability to give clients the opportunity to edit content. They always want that. Now I set them up with Contribute which works pretty well for unless they are sophisticated enough to want to get into their shopping cart tags to change prices...I have a current pickle with that dilemma.

Yes, one man operation has it's limitations to be sure. Also some benefits though :) I've often thought it might be fun to partner up with someone on a project but have never found the right fit of concept/skills.

I am determined to find something to do for my own sites that I can shift into being my main income. It just seems so much more direct. At the same time, I love developiong sites, it's very rewarding.

Your English seems perfect to me!

Laura

[henry0]

Perhaps if an opportunity should arise will we work on a project in a team fashion mode?

I am presently working on depicting a project for a new client

Within a few days I will send you a “Sticky mail” with a few ideas

Then we’ll see

Henry

[Lvanhoff]

Great...I often think the synergy of two minds and skill sets can make for a lot of fun and a more interesting project!

[Fortune Hunter]

Does anyone who has contributed to this thread have an actual maintenance contract that they would be willing to share?

I would like to see how somebody else has their contract worded, which hopefully will give me a few ideas of how to develop my own.

Fortune Hunter

[Lvanhoff]

I would be happy to share it if I had one but I don't use one...I know, ridiculous. And my former career was a lawyer...I think I have developed an aversion to contracts. In any case, my arrangement with clients is simple...they pay the $900 at the beginning of the quarter, and around mid-month every month I send them an email with their ranking report, my comments on my review of their traffic report for the month and suggestions on changes. Once they ok any site adjustments, I make the changes and let them know I've done it. Mind you, I don't use a contract for the web design element either which I know will have anyone reading this groaning in disbelief. But I've never had a problem and have close working relationships with all my customers. Im also really small and realize as I grow I will have to change that stance.

So...long explanation for...sorry, I don't have one to share because I don't have one.

[Fortune Hunter]

Laura:

You were an attorney in your past life and now you design web sites? Strange, I was thinking of giving up this life to go to law school, maybe I should reconsider that idea.

You are an attorney and don't use contracts, but people in your trade have scared me so bad I have contracts for everything!

Fortune Hunter

[Lvanhoff]

I know, I am such a weirdo.

Law school...hmmmm, well...if you have a real passion for the law and you've been hanging around law firms and truly have a sense of what it is to do that job then go for it. It's a fabulous education. Even if you never practice, it's a solid brain training. My background before that was in graphics/advertising but I thought I would make a better living as a lawyer...wrong reason to go to law school in my humble opinion. After 4 years as a litigator I was never having much fun, tired of the ego bs and games and posturing so got into web design as a natural extension from the graphics/desktop publishing days.

You are very very smart to have contracts :) No question.

[Fortune Hunter]

Actually I don't really have a passion for law per se, I actually want the training for self defense more then anything. I think when you are an entrepreneur that you don't always do things the coventional way and I have been pushed around one to many times by attorneys.

I doubt I would even practice law, but rather just keep a license to push back if some attorney tells me I can't do this or that.

A friend of mine who had made it through 2 years of law school before leaving said that he didn't feel I would do well there. He said he didn't think attorneys created anything, but rather just drained off what others had done or built.

He encouraged me to stay an entrepreneur and keep doing my own things as he said that he felt it was better to create and build then destroy. I liked his reasoning, but I can't shake the feeling I am missing something by not going to law school.

Fortune Hunter