I may be a professional independent marketing consultant, but I’m still a freelancer. Sure, the distinction I often hear is that a freelancer does mostly execution work where a consultant mostly… consults. As in, she advises, coaches, guides. She steers while freelancers row.
One of the newsletters I’m subscribed to is from Kai Davis. His newsletter for Indie Consultants always offers some brilliant insights. Much of what he says resonates with me because they mirror my philosophy.
Today, his newsletter answered a question from one of his subscribers about chasing a client who owes them money. The amount was small, according to Kai, but it was still infuriating to this subscriber who has done the work and wants to get paid.
Kai’s answer offered a few important lessons.
One of them was about the sunk cost fallacy. When one has committed much time, energy, and money (including the money in finding and landing the client in the first place, along with the money spent on carrying out the project), mental anguish in trying to “get our money’s worth” sets in.
In this case, the subscriber was contemplating suing the client, apparently for a small figure, mostly out of principle. I would say that it might have been more out of spite than out of wanting to get paid.
When a client wrongs you, it’s easy to get frustrated. Says Kai, “Would it be worth pursuing this, guns blazing, even if I didn’t get a single dollar out of it?” The cost (both psychic and physical costs) can be magnitudes greater than what this client actually costs you.
I once had a client who hired me to write four salesletters for him (in the health and wellness industry). All long copy salesletters that needed a lot of research. Back then, I was young, naive, and hungry. The client ended up being a micro-managing tyrant, and the more he pushed, the less motivated I was to keep working with him.
I ended up giving back his money. I lost $60,000. But the way I looked at it, it was as if I paid to get rid of this client who was causing me nightmares. Literally.
So I agree with Kai on this one.
What’s done is done, and there’s nothing you can do to regain the money you’ve lost — even if you do regain it, you’ll never be whole again because when you add the loss of sanity, happiness, and most of all, time spent chasing the money, it is still not tilting the gain in your favor.
I do believe it’s going to make you worse off.
Back when I was doing mostly copy work, I wrote an article on how to negotiate fees. It was one (and still is one) of my most popular articles. In it, I said that you should never give away free work without asking for something in return first.
The reason is, the perceived value of the service depreciates immediately after the service is rendered. It’s one of the reasons why I only accept 100% upfront payments for most of my work. And you should, too.
Being paid 100% upfront is same tip Kai gave his subscriber. It’s also something that’s easier to do when you sell productized services. If your service is 100% custom, there are various ways to package your services together, to a certain degree, where you can give a fixed-fee, fixed-scope offer.
Aside from coaching and one-off sessions and calls, my services are broken down into three phases: probing, planning, and piloting. (There’s actually a fourth phase, i.e., preserving, which can be for maintenance after the project has been delivered and to preserve its integrity.)
The initial phase could be an auditing and roadmapping session. The second phase could be a planning and strategizing phase. And the third is the project execution with oversight and quality assurance.
Each phase is its own packaged offering.
Sometimes, I start with the first. Sometimes, I offer all three together. It depends on the severity, complexity, and urgency of the project, and ultimately my client’s needs and goals.
Each one of my consulting services are fixed monthly fees. But depending on the discovery call and later the roadmapping session, the length of the project (i.e., the number of months) will be pre-determined to a great degree.
When I used to write copy, I would charge anywhere from $3,000 to $18,000 per letter. With my consulting packages, my fees start at $3,000 per month.
Copywriting is pretty much a fixed project, which is why asking for 100% of the fee upfront was easy. Similarly, with consulting and advisory work I ask 100% of the monthly fee at the beginning of the month. Larger, longer projects would require three months (quarterly payments) in advance.
Sometimes, although rarely, I get pushback.
When I ask 100% upfront, some clients say, “Sorry, but I only pay once the service is delivered.” To that, my answer is that I’m not a delivery service, and in fact, the delivery, which is the final step, is free. Your payment is not for the delivery but for the privilege of giving your project my attention.
The last part is crucial. After all, while you’re doing, say, an audit, the service is being delivered right then and there. It may not be in the form of a deliverable, but the service is indeed in the process of being carried out.
When I used to sell copywriting services, I had a clause in my contracts that stated that the deposit is non-refundable. If a client canceled before the delivery, they forfeit their deposit.
If they requested a refund, my contract would state that there would be a cancellation charge equal to 100% of the service applied to their account (or 50% depending on the client or project, such as when a project is canceled during the initial phase before any real work started).
This avoided any quibbling.
Now, I do offer a guarantee. If it’s an ongoing project and the fit isn’t there within the first 30 days, I return 100% of the money.
By marketing yourself properly, chances are you will find good-fit clients before they even consider sending you money. So this lowers the chances of having any refund requests in the first place.
Nevertheless, if someone does day “I don’t pay until the service is delivered?” Usually that’s a big old red flag. I refuse to work with those types of clients. I live by the “Sanborn Maxim” which goes:
“The customers who are willing to pay you the least will always demand the most.”Mark Sanborn
And customers “willing to pay you the least” include customers who are nitpicking your terms and not just your fees.
But keep in mind that, if you’ve positioned yourself well, and if your expertise and authority are strong and well communicated, and if you have some barrier to entry (like a qualification process they must go through), the likelihood that you will get PITA clients are slim to none.