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Client billing.


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3 posts
Member 4718
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Hey, from Texas!

I am curious what type of billing works for your agency and your clients.

Progressive; billing for the hours actually worked on the project.  Can time reported actually be trusted?

Milestone; billing for the percentage of work completed based on an estimate.  20% down, 30% halfway, etc.,

Straight fee; billed on retainer to cover all projected work in a budget.

Just wondering (and worrying) that we may miss income in our progressive way of billing, based on time reporting.

Thanks for your comments!

Member 4336
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Here are my thoughts, Waynette:

Hourly billing is a trap. I believe in project billing, where you estimate what you'll put into the project ahead of time and then bill based on that estimate. Track against time, of course, and if your time is way short of the estimate, then feel free to bill less. But this greatly simplifies matters and clients actually like it better. With a project bill rather than an hourly bill, they have an actual budget with which they can work. Just make sure your original estimation is good. Further, hourly billing just invites commodification of your services, for the client will ask what your hourly rate is and then compare you to Agency X down the street. You never win in these situations.

What's more, your project estimate should include three sets of revisions, with all creative derived from an approved creative brief. Anything after that and, unless your creative team and account people are clueless dolts, it means the client doesn't have their act together when it comes to providing input. Either they didn't look carefully at the initial concept, didn't run it past the right constituencies, or just didn't give you good information. This reduces the likelihood of the project becoming a soul-destroying hamster wheel of endless revisions. Profit-destroying, too.

Milestone billing is an absolute necessity from a cashflow perspective. What's more, I provide a clause in my statement of work that if the client hasn't provided feedback on a project within ten working days, I reserve the right to consider the project finished and bill accordingly. This keeps the project moving through the pipeline rather than sitting on someone's desk. You shouldn't be penalized because some VP of Sales can't be bothered to give input on your work.

Finally, retainers have their allure, but can be very dangerous for the client will often think they own you. Instead, retainers should be on account work only, with creative work being billed on a project basis. Tony has a really good formula that I've applied several times to the mutual satisfaction of agency and client alike.

Hope that helps.

Member 4718
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Thank you so much.  Good stuff!

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