Lewis, I've fired only one client in 16 years in business. It was a small start-up company.

The guy said he'd start paying me after 2 months, once he had some cash flowing in. He seemed like a nice grandfatherly type from The Bronx, so I trusted him and started work. I got his new product great exposure in lots of media including a great placement in USA Today.

When I reminded him after the 2nd month that it was time to start sending me checks, he started making excuses. In hindsight, I should have stopped working for him at that point, but I still wanted to trust him.

When he owed me $10,000 for work done over about 5 months, I finally told him unless he sent me payment in full, I'd pull the plug. He went ballistic on me -- calling, me names, questioning the results I'd gotten for him.

I decided I didn't want to be working with someone who lies, so I simply stopped taking his calls. I walked away from the money, which I'm sure I would have had to fight for, but I got instant peace-of-mind.

And I learned a lesson -- never start working without receipt of the first check.

David,

Great advice: I always collect 50 percent up front before I start work.

I've learned this the hard way as well. But with each experience, I've updated my policies, rewritten my proposals and contracts and created new, tighter workflows to combat overruns. They still happen from time to time, but no where near as much. And I'm happier, more productive and generating more income because of it.

Should the contract contain clauses describing when hourly charges kick in?

Yes, yes and yes. I'm also clear with my clients what's included in our contract, what's not and how we account for overages. Furthermore, I set firm deadlines and charge additionally for going over the deadlines.

I've found none of these are a big deal as long as they're clearly understood by the client. And I always phrase that discussion in ways that benefit the client, not protecting me.

Lewis,

This is a great post about bids and customers service! I provide bids for our clients on market research projects. For what its worth, here is my two cents:

If a project is dying due to a mistake that I made based on correct information that was given to me, then that is my mistake and I am more than willing to live with it. However, if I give a bid based on incorrect information or based on specs that have changed, then I don’t think keeping “our lips pursed and just make the client happy, all the while bleeding money” is good for either party. If both sides do not feel that they are getting value from the relationship, then the optimized level of mutual benefit will never be reached. If I feel I am losing money by continuing a relationship, it makes it really hard to justify expending the effort needed to add the small “touches” to a project.

If you have not already, one idea might be to build in costs for x amount of hours for changes after a sign-off point (whatever you feel is reasonable). For each change request, you could say, “I would be happy to make that change. I estimate that it will take approximately x hours to make this change.” With a newer client, it might be good to estimate on the higher side so that once you have made the change, you can call them with the good new that it only took you x hours to make the change and they still have x total hours for project changes.

Dawud and Bill,

Thank you so much. I think all of us can learn from your advice, and I am taking notes for future presentations, and I will credit each of you.

Let's keep this going. Any clients out there want to share? How about other consultants?

This is a great post Lewis, thank you.

I do make clear that my prices are based on time and available bandwidth, and I detail when hourly rates will kick in. I also note the number of revisions that can be made before additional charges kick in.

BUT, I haven't always followed my own rules. You've given me the resolve to do that from today on.

We outsource many functions. I work with a design company and a printer mainly, while I do all the strategy work, and the technical and branding writing.

After a relationship with an outside firm is established, I stop bidding projects to other vendors (company policy). I require quotes to forecast my budgets but will work with the outside firm in the following ways:

- If a project is running over the quoted amount because we are dragging our feet or "writing by committee" and changing the specs, I ask to be invoiced for the fee incurred so far, specify we are running over on costs to my team and then work with the consultant to figure out a fair pricing for the additional work.

- If the changes are required because the designer did not understand my creative direction, we stop the clock, regroup face to face with the owner of the company doing the work for us, and then resume when things are clearer. We split the cost of the work done in "misunderstood" mode, which is usually not a lot as I stay on top of projects.

- For projects where the scope and goals are unclear, I demand to sit down with my internal customers and figure things out *before* I pass on the specs of the job.

I pay my invoices on time. In fact, I am often the one asking for the bill so I can put it through our system to close the quarter or year cleanly. I also understand that people should get paid for the work they do and not have to work to get paid.

Valeria,

That is very fair, and something that has never happened to us. (We also offer print brokering and graphic design, as well as the other marketing services.)

Despite much dragging of feet and many, many client changes, including changes to their changes. No client has ever offered to pay for our additional time. I take blame for that to this point, but from this point forward our contracts will be much more specific.

Hi Lewis,

Excellent post. I like what Bill Gammell wrote on the subject: "If you have not already, one idea might be to build in costs for x amount of hours for changes after a sign-off point (whatever you feel is reasonable). For each change request, you could say, “I would be happy to make that change. I estimate that it will take approximately x hours to make this change."

I know of consultancies that have added this into their contracts to protect them from clients who get carried away with the analysis of "every last word" and endless changes.

Bottom line: in order for a relationship to be mutually respectful and satisfying, parameters must be set. And it's best to do that right from the beginning of a project.

Great discussion, Lewis! And it is one of the biggest challenges in business - managing expectations and scope.
You know, I love the old "triple constraint" ... a triangle that has the word "scope" on one side, "budget" on another and "time" on the last one. When any of these elements become a priority, then we ask the clients to choose which direction they would like to go.

Claire and Gavin,

Thanks so much! I have learned a lot and hope others have, as well. I believe that our most important product is creating great customer experiences. However, if we aren't happy, it's unlikely our customers will be.