Pricing 101 — What if Clients Disagree?
TLDR;
- Tracking your time minimises disagreements. It acts as a record of everything you’ve completed for a client or project.
- Transparency and communication are key tools in gaining trust with a client.
- In some cases, even if you do everything right — disagreements may still occur. If this happens, try to understand from the clients perspective. Could it be that the scope was too large, you gave poor estimates or maybe your client just likes complaining.
To Begin…
Let’s face it — if you work within the professional services industry it’s likely that at some point in your lifetime you’re going to be faced with client disagreements. Especially regarding price. But why?
The price of your service or product is what ties everything together. It’s the value clients place on what you provide. And some people are going to question the cost of that value, and you need to be able to defend it.
To avoid sticker shock we have put together a few strategies to prevent the possibility of clients challenging billable hours. If implemented, you should be able to avoid all those unnecessary arguments.
1. Time Tracking
Time tracking is the most obvious choice here. It’s the key tool that is going to help you get through disagreements with clients. I’ve already covered why you should be tracking your time. But just to reiterate, tracking your time allows you to have a record of everything you’ve completed. Not only that but it allows you to bill the client correctly, giving the client a piece of mind in knowing how many hours are going into their project.
2. Being Transparent
To ensure your client understands the value of your time you need to be transparent. This is going to negate the possibility of your client having ‘sticker shock’. Sticker shock is when potential buyers of your product/service may be surprised when they discover the cost has increased in price. Ultimately, this can lead to dissatisfied customers, lowered levels in trust and possibly negative word-of-mouth. All of the above, having lasting impacts on future business.
To overcome the possibility of this happening Hourly offers the option of attaching time-sheets to invoices. This means that clients can view everything achieved by you and your team. Hourly also helps you budget. Basically, you can predict the specific point when an increase in budget will be needed.
To further increase transparency between yourself and the client — give them access to project management software such as Jira or Trello. This allows them to see the achievements made by your team. If the project is especially long and detailed this can be helpful in the client further understanding delays in production.
3. Communication
I’m sure you’ve heard it before, and you will probably hear it again but communication is key to developing trust in client-relationships. Regular updates and showing progress outside of just tracking your time is extremely important. Talking to the client about how you’re tracking really allows them to see the value of what you’re providing and they can put a face to the name.
Try to do this in person as this is the easiest way to get everything out in the open. If this isn’t an option at the least try Skype or Slack. Lack of communication can be detrimental to the development of a project.
But, before regular communication intervals begin it is important to set up expectations early on (e.g., documenting scope and requirements) this is to ensure that you have a ‘shared understanding’.
A final tip, share bad news early on! Don’t wait until the last minute when nothing can be done. Let your client know if there’s an issue and that you’re working hard to fix it or if it can’t be fixed try to find a solution or reevaluate the project.
4. Billing Practise
Another important tip to put in place from the start is the cadence or frequency of billing. This is when you’re charging the client on a frequent basis (e.g., at the end of a deliverable or at a regular interval such as monthly invoicing).
By billing at regular intervals you are setting up the expectation of invoicing and billing the client. This means the client won’t be surprised when they receive the bill. If there are any drastic increases in the cost of your service — stop by your clients office and explain in person why an increase in cost has occurred.
5. Predictions
Predictions can be handy when it comes to being able to spot an issue before it happens. If you’ve got a good time tracking platform (cough…Hourly…cough) then you should get predictions. Hourly can predict time based on historical trends, patterns and future known events such as public holidays and annual leave.
These estimates assist businesses in ensuring optimal outcomes in future project planning and sales forecasting. The advantage of this software is that you’re going to be able to predict when you’ve reached allocated budgets or individual KPI’s. Keeping you and your team on track, alert and ready for the week.
What if I am already doing this?
- Help your client to better understand the value of your product/service. This could simply just be demonstrating to the client what you have achieved for them.
- Does your client have a case? It’s important to understand that sometimes the client is right. Consider it from the point of view of the client.
- Are they just complaining or is it for strategic reasons. Keep in mind that your clients are customers. Maybe what they envisioned just isn’t happening or they don’t understand why it hasn’t worked out exactly as planned. Or maybe, just maybe they are trying to low ball you.
- Poor estimating. Unfortunately, saying you can do too much is just setting yourself up for trouble. Don’t do this.
- What sort of client are they? Are they important enough or can you just cut ties. Sometimes, it’s just too hard to keep the relationship going.
In the End…
Now you know the best practice in keeping your clients happy and informed. If you do all the above, or even just one (e.g., time tracking) disagreements with clients should be minimised. However, keep in mind that sometimes disagreements happen even if you’re doing everything in your power.
But what is going to make your life easier is tracking your time. This keeps you covered if things aren’t working out with a client. If you think it’s for you, why not check out Hourly? It’s free for 30 days!
