Help a TechRepublic member figure out how to transition clients from his current practice of not charging for communications to being billable expenses.
I recently received an email from TechRepublic reader Colin McRae, which read in part:
One headache I've only now decided I need to deal with is whether or not to bill for time spent on communications with my clients, or some portion of it. Let me clarify though: My clients are all long-term SMB clients (more S than M though) where I manage their IT on an ongoing basis, so I don't currently deal with clients where I do just one project for example. I bill for time spent, not for specific activities, so whether it's configuring a router or deploying a new PC, or just reviewing logs for some maintenance purpose, it's an equal rate. Consequently my rates are fairly low, but this gives me freedom to spend time, with my own initiative, on the types of tasks that high-rate consultants probably wouldn't have the leeway from clients to work on. The result is that I can do all tasks big and small with little hassle or requests for justification. Clients just see it as me taking care of them and I provide a monthly report on billable activity.
But one thing I do spend a lot of time on is communicating with them, providing updates on things in progress, asking questions, giving directions like "please reboot that machine when you can" etc. This is mostly done by email. What I don't do is track the time I spend on this so ultimately I communicate for free. Some days I might literally do two hours worth of typing with a client or clients, or more if it's one of those emails I try to carefully word and re-word ad nauseum, so as not to ruffle feathers. I'm sure you know the type.
But it's getting to where I need to stop doing only 1.5 hrs a day of billable time and start being profitable; I need my clients to respect my time but I'm concerned any sudden change in billing practices will gain unwanted attention towards the freedom I currently have. I don't abuse billable time, in fact they get a lot more than communications for free, but I also don't want to have to constantly justify things.
So i find myself at a point where I don't want to give away my time in such high amounts. Probably having a baby has prompted this. I know a certain amount of communication is good and should perhaps be free, to maintain the relationship, but I really think I need to start clients thinking that my time is more valuable. For example if a client asks me to clarify something for them about work I've done, or makes a comment that compels me to respond (example, blames me for something not working when it has nothing to do with anything I've done), what should I be billing for?
I've considered having a "blanket" expense, so monthly I would say 1 hour (or whatever) billed for communications and other small hard-to-track time expenditures, so I can just lump it all in there and not have to really track the individual things.
Or, just raise my rates but doing so without an explanation to the client concerns me as I don't want to appear to just be raising them for the hell of it, I'd rather they have some appreciation for why (especially since it is prompted by my giving time away for free - I guess that's the sticking point for me, to ensure they understand just how much freebies I've given).
Or option 3 is to just cut the time spent considerably so this isn't such an issue, but that changes my pattern of communication and might be perceived as something other than me trying to save time.
This is a common problem for consultants who bill by the hour. The one thing I would not do is adopt option 3. You can hardly ever communicate too much with your clients, so it would be a sad day indeed when communication becomes the casualty of your billing policy.
Ideally, you want clients to pay you for this time, and you want them to like it. That means that they need to perceive the value of the service that communication provides. Don't tell them, though — show them. Concentrate on making your communications concise yet complete. Tell them everything they need to know (but no more) in a way they can immediately comprehend. Why did I say "but no more?" It's called TL;DR. Too much information is just as bad as not enough, because if they don't read it, you may as well have not written it. The same goes for oral communication, perhaps even more so.
If your client thinks to themselves, "Whenever I hear from that consultant, I get something useful from it," then you are living up to the name of our profession: a consultant is one whose primary value is in consultation. If that's the case, your client won't be likely to balk at paying for it as part of your invoice. Once you've eliminated that objection, you have lots of options about how to ask for it.
If, unlike Colin, you bill by engagement or retainer instead of by the hour, then this issue never comes up. However, you still must account for it within the contract price. It's an easy value for your client to overlook, and one of the reasons why consultants have a reputation for being overpriced. I prefer to sell it as a benefit rather than trying to bury it in my fee. You could also specify a certain number of hours for this kind of activity in your contract, and then bill hourly for any overage.
Personally, I make sure that my clients know ahead of time that I bill hourly for such communications, and that even a brief interruption will incur a minimum charge. Then, if I decide not to bill them for something that only took five minutes, I'll put it on the invoice and offset it with a credit. I want them to know that I'm being generous, without making too much fanfare over it. It's more pleasant for everyone if I start from the position of being entitled to remuneration, rather than having to make that argument on each occurrence.
The gray area for me is when a new prospect contacts me for the first time. I generally don't charge for that initial contact, but once we seem to be a good fit I get them to sign a contract before I give them too much help. The hard part is to know when it's too much. I tend to err on the side of generosity, and write it off as marketing (if they don't engage) or cost of sale (if they become a client).
The hard part for Colin will be figuring out how to transition his clients from what he has been doing — giving them a lot of free time — to one of the options above. How would you suggest that he address this with his existing clients?