Job’s Done, But Client Can’t Pay. Now What?

Okay, maybe not quite that definitive, but close. Suffice to say, a sticky situation the likes of which I rarely find myself in. After all, one of the best things about commercial freelancing is that payment issues are rare. 30 days or less has absolutely always been the norm for me in 95% of cases.

Was contacted a few months back by a commercial writing client I’d done work for in the past. Successful businessman starting a new venture and needing a marketing brochure for it. He’s a hands-on guy (translation: major micro-manager), but not obnoxious about it. And willing to pay for someone’s attention.

In addition to the brochure (just a four-pager), I ended up crafting a name and tag line for the venture as well. Settled for $1000 for the both, which though a lot lower than I should have gotten (good blog topic in that …), they took me, probably, a total of a 2-3 hours to do – I actually came up with the name during a meeting – so I won’t gripe too much.

Anyway, because I’d done plenty of work with this client in the past and never had a problem getting paid, I didn’t get an upfront deposit. I’d say, “Mistake!” but given the track record, it really wasn’t. And hindsight’s always 20/20. That said, it may not be a bad move, given the climate we’re in, to go with upfront deposits from all clients until things get less dicey.

Well, my guy calls me after I’d sent an invoice for the total (we’d discussed it before I’d billed him) with some disturbing news: His credit line with the bank (to cover operational expenses of getting this new venture up and running) had been revoked. It’s one of the more common by-products of the economic slide we’re in the midst of. Banks just aren’t willing to get any more extended.

Add to that that revenues from his main business are off. So, suddenly, he can’t pay my invoice – at least not right away. So, we set up a schedule, with roughly 30% due on X date, about 40% due two weeks later, and the final 30% due about three weeks after that. Deadline One (a Monday) comes and goes. No check. But, that Friday, he calls me. And that’s key. As long as people are communicating with me, I’ll cut them a world of slack. Shows good faith, accountability, and integrity.

We’re going to have to rework the timetable, he says. I tell him I’m happy to work on a schedule of $500 here and $500 there. He says great, that he’ll be get back to me. It’s been about seven days (and a holiday in there) and I haven’t heard from him, and if I don’t in a few more days, I’ll be in touch. Bottom line, while I’m not terribly pleased, I’m not worried either. I know he’s good for it.

Ever had a situation like this or similar? What did you do?

What are some of the valuable lessons you’ve learned from your experiences?

Do you get upfront deposits from all clients?

Do You Quote By Hourly Rate or Flat Fee?

Pricing our commercial freelancing work. How do you do it? Me? I became a convert to the Flat Fee Channel (“All flat fees, all the time…”) some time back. Rates are best quoted within the context of a particular project. Tell a client your hourly rate is $100, without relating that rate to a specific job (he’s thinking, “Is it going to be 5 hours or 50??”) and he might just run screaming into the night. But say $1000 for a project you think will take 10 hours, and if that’s close to what he’s budgeted for the project in his mind, then you’re in business. An hourly rate, in my humble opinion, should be a number kept to yourself, and used only for internal calculations.

All that said, the debate still goes on. Last week, got the latest piece from wildly successful Atlanta commercial freelancer Ed Gandia. Ed’s the publisher of the great ezine, The Profitable Freelancer (visit and subscribe at no charge). Ed did a great two-part piece for my ezine in June and July of this year about how he made $163K in his first full year as a commercial freelancer.

Ed’s latest piece was entitled “What’s Best: Hourly or Flat Fee?” Check it out (it’s short) here before reading the rest of the piece. Here was my response to it:

Ed: I have found precious few commercial writing clients willing to even let you quote on an hourly basis if they don’t know you. That’s almost exclusively reserved for long-term clients who trust you implicitly, and/or for projects that have, by definition, an undefined scope and fluid parameters, that simply don’t lend themselves to being firmly nailed down. Not sure how one would even go about trying to force an hourly-rate approach on a client. For most commercial freelancers, in my experience, the more important issue is do you quote a straight flat rate or one that reveals your calculations (i.e., “$1500” vs. “$1500 based on 15 hours at $100 an hour”).

The former is the better approach, because as you point out, if you work fast, and finish the project in, say, 12 hours, you’ve just upped your hourly to $125. And as you also point out, the client only cares about the final result. As long as you get it done for the amount they agreed on, then, technically, they don’t care if it takes you 1 hour or 50. If you share your internal calculations, then if it takes you less time, technically, you should charge less. Going with a flat rate focuses the whole discussion to the end result, which is the only thing that really matters.

Just as importantly, the flat-rate approach has the subtle but powerful affect on you, the commercial copywriter, of further “professionalizing” what we do. We’re being paid to deliver a professional service for a fee. We’re not an hourly worker punching a proverbial clock. And I say that same distinction isn’t lost on the client either, who’s more likely to view you as that professional and worthy of your fees.

Also, just a note about flat fees. I’ve found over the years that a range in your quote that varies by 10-15% is acceptable to most clients. Haven’t had any pushback from a client ever. Generally speaking, by agreeing to a quote of, say, “$1500-1700″ or “$4500-$5000,” clients have reconciled themselves to the upper end of the range, and because the two figures are close, it’s not a problem. But it gives you a bit of extra wiggle room for unexpected surprises, which if you have a cushion, you may not have to even charge for. And that’s good for client PR (though if there IS extra time involved, and you don’t charge, you might let the client know that you usually would but won’t this time. That way, you don’t establish a dangerous precedent by having them think that such an M.O. is standard, which it definitely isn’t).

AND, if you end up below your upper end, which has often happened for me, and charge a bit less, it’s a nice surprise for clients, who can’t help but notice you were responsible and frugal with their money. If you suspect money isn’t the #1 issue for a client, I might even suggest one bump the top end of your fee range a bit beyond what you know it’ll take, so you can in fact, ultimately charge less than the upper range so as to make that good impression.

How do you price your work?

Have you had unpleasant experiences quoting hourly rates in a vacuum (i.e., minus the context of a particular project)?

Do you have clients you work with on an hourly basis, and if so, what’s the nature of the relationship and the work?

Any insights you’ve learned about pricing work you care to share?