One of the most challenging issues anyone faces in a business is getting paid. It’s even worse if you’re a freelancer or an independent consultant.
People usually think twice before messing with a big company. But, when you’re on your own, you don’t have the same bargaining power.
But, some people just seem to set out with the notion to swindle you. They bait you into working for free. And if you’re not careful, you fall into the trap. I’ve fallen for these ruses more times than I can count. I’d like to think getting wiser now but, you never really know.
This is not about Building your Brand or Scope Creep
What I’m talking about is not the same as giving away work for free to build your brand awareness. I know that when we’re starting out, we tend not to put forth our demands either because we think we don’t deserve it yet or, because we’re just desperate to land the client. This is something we all do and with time, we know when to step up our game.
This is not “scope creep” either, which is when the client agrees on certain deliverables (e.g., a 5 page presentation) but then adds more and more (e.g., 10 page presentation with full excel spreadsheet of calculations).
This is different though. This is when a client actually sets out with the intention of not paying you at all. This isn’t you being desperate. This is simply you not recognizing the signs that a client is about scam you.
This doesn’t necessarily apply to hourly billing
The first thing for any contract is to have a discovery meeting to understand what the client wants and where I could possibly fit in. Discovery Meetings are never usually billed. Anything up to the point of a proposal getting signed is actually free because I charge based on deliverables.
I’ve stopped charging by the hour because I’ve come to realize that when it comes to billing, it’s just too damn difficult to justify all the billable hours. As an independent contractor, I have no institution to back me up or verify the billing process. So, charging based on deliverables is a more tangible option and there’s less ambiguity.
There’s a famous quote among consultants…
“You don’t pay me for an hour’s work, you pay me for my years of experience!” I know people understand this, they just don’t want to appreciate it.
What’s worse than negotiating rates, or not counting all the time invested in getting to a proposal, is the fact that some clients don’t even want to sign a contract. Some clients will stretch out the discovery process to get substantial work done and then just walk away.
Whether you’re new to the business, or just a little naïve, you get taken for a ride. You don’t realize right away what’s going on and before you know it, you’ve ended up doing a lot of work without any hope of getting paid.
Here’s usually how it goes…
You meet the client and do your discovery meeting. You get very excited because the client calls the very next day and asks you if you’ve come up with any ideas.
You feel the client’s eagerness to do business with you.
You want to impress the client of course, so you start to tell them what you’ve come up with. All this time, you’re just chatting really, like a brainstorming session. So, it seems pretty harmless. You know you’re already giving something away at this stage but, the client just seems so engaged and you think to yourself that you really need to pay your bills.
Next, the client will ask you for some sort of mock up. Here, you try to stop him and tell him you will send him a nice proposal on the ideas and how they will be implemented.
Of course, you want to do this because the proposal will also have a lovely “fee section”, which you really want to put in front of the client.
But, the client is clever and things don’t really go according to plan.
The client will say something like, “It’s ok, we don’t need a formal presentation at this stage. We just want to see how the project can be structured. Just some rough ideas are enough. Let’s have a look. You know if the transaction is successful, there’s a big fee in it and you will be compensated.”
You don’t end up putting a proposal in front of him because he’s managed to convince you there’s a pot of gold at the end of the rainbow.
And you don’t know what to do. In your mind, you feel that he could be right and there could be a substantial fee if you charge him upon success.
You carry on thinking he’s as vested in this as you are and with everything you’re doing, you’ll surely be compensated. I mean, paperwork is just a formality, right?
So now, you’ve done a substantial amount of work without a contract and even submitted some ideas to this client.
Next thing you know, you get a phone call from the client. He sounds genuinely devastated and apologetic that the deal is probably falling apart. You hear things like, management went another way… this is probably not the right time for us…we’re looking at enhancing the project down the line etc etc…
The way the conversation goes, you actually start feeling sorry for them. You start feeling that the poor guy tried his best and it’s just unfortunate that deal fell through.
In the end, there’s no success fee and the client just walked away with a bunch of your great ideas, which he may end up using to impress his bosses.
I know what you’re thinking. At least you’ve built a relationship and the next time this client has a deal, he’ll be coming around to you because of all the work you put in for free.
But the truth is, even if he does come back, he’ll simply be trying the same thing all over again.
Some people are just like that. They are con artists. They will try to get their way without spending a dime, every time.
Ask yourself this, how many doctors or lawyers you know will even listen to your problem without a fee, let alone offer you any advice. You’re a professional just like any one of these people and you deserve to be paid for any work you do.
There are no relationships to be built with people like this.
If a client’s motives are pure, he wouldn’t have a problem signing a contract, even if he’s negotiating hard on the fees.
In fact, client’s who negotiate fees, do so because they have the intention to pay.
So, the client may defer the fees or even negotiate the amount down, but he wouldn’t ask you to work without paperwork. And he surely will not be walking away with your ideas without paying you for them.