Archive for the ‘Billing’ Category

How to Raise Your Rates in 2012

It’s time to raise your rates for 2012! I know lots of people cringe at doing this, but honestly it’s much easier than you think. So here’s what you do…

First, send out 30 or 60 day notices to all your clients giving them a heads-up that fees will be increasing. I would wait until January to do this rather than right now in the middle of the holidays. (And ideally for next year, plan on doing this in October/November instead of January.)

Not sure how to word your notice? Simple is always best. Here is a sample script you can use:

Dear [CLIENT],

This letter is to let you know that the fee for your support plan will increase to $[NEW FEE AMOUNT] per month effective [DATE].

It is such a pleasure working with you, and I really love watching you grow and move forward in your business through our work together. [HERE, INCLUDE TWO OR THREE MAJOR ACCOMPLISHMENTS AND GOALS YOU’VE HELPED THE CLIENT ACHIEVE. USE FACTS AND FIGURES, ESPECIALLY DOLLAR AND PERCENTAGE INCREASES, AS MUCH AS POSSIBLE].

I look forward to continuing our wonderful relationship and helping you achieve your goals and dreams!



You notice that in the second paragraph, you should bring up a few of the significant accomplishments and goals you’ve helped that particular client achieve through your work together. You should include facts and figures whenever possible.

If you aren’t yet, start trying to track and identify dollar and percent increases that your work and support is directly or indirectly responsible for (e.g., how many more clients have they been able to work with? How many hours of time were you able to put back in their pocket? How much more money have they made since working with you? How much have their profit percentages increased since then?).

These things serve as a reminder of your value (in terms of how it relates to them and their business) and why they continue to work with you. This is the WIIFM (“what’s in it for me?”) factor.

Just remember, you don’t need to offer excuses or drawn out explanations. You’re not asking for their permission because you’re not an employee and it’s not up to them. It’s YOUR business and you don’t answer to clients when it comes to those decisions. You being profitable and making sure you are stable, secure and growing financially actually helps clients because if you aren’t doing well, you will not be able to help clients as well as you could be.

If you have any other questions around the topic of raising fees, please do post in the comments and I’ll try to help. 🙂

If you REALLY want to learn how to earn better in your business for 2012, in ways that are WAY more client friendly and attractive, get my pricing and packaging guide: “How to Price and Package Your Support Based on Value and Expertise–NOT Selling Hours!” Click here to check it out!

Dear Danielle: Should I Get Payment Up Front?

Dear Danielle:

I have a billing question. Should I ask for payment up front or after the work is completed? –KH

You don’t mention whether this is for project work or retained services. Either way, I have some advice for ya. 😉

If you’re doing project work, it’s definitely a good idea to get some kind of up-front payment. Here’s how I do it in my business… if it’s under $500, I tend to require full payment upfront. If it’s anything over that, I require 50% upfront.

Remember, you aren’t a client’s bank and they need to have some skin in the game. They’ll take you and the work you are doing for them more seriously. Plus, getting at least some payment upfront will not only help mitigate your losses should you end up with a dead-beat client, but it will help avoid working with flakes in the first place.

When it comes to providing ongoing support work, clients are usually charged an upfront fee called a retainer. By it’s very nature, it is upfront because they are retaining your services in an ongoing relationship and guaranteeing your time and their place on your roster. There is no deposit or 50% when it comes to retainers. It’s in full, upfront.

Here are some older posts related to this topic that I think you’ll find useful as well:

Help! Client Not Paying!

How to Avoid Getting Stiffed on Payment

You want to also check out these categories on my blog here:

Getting Paid

Hope that helps!

How Billing by the Hour Is KILLING Your Business

When your income is tied to how many hours you can sell, you automatically limit your earning potential because there are only so many hours in the day. This is exactly what you’re doing by charging by the hour in your business.

What I bet you didn’t know is that the hourly billing model is a relatively new artifice. In fact, there was a time in the not too distant past when everyone charged for their services based on value, not by the time it took.

Administrative Consultants and virtual assistants are giving all this wonderful support and expertise to clients and helping them succeed, while they are just barely scraping by in their own businesses.

I know how little people are earning in this industry and how much they struggle to stay afloat because of it, and it’s evidenced every year since 2006 in our annual industry survey.

This is when we start to see them grasping onto straws or making a mass exodus into another business entirely. They think, “I just need to turn the work into a factory and hire all these subcontractors to do the work. Then I’ll make more money.”

But they soon find out that that is a much bigger, more complicated and involved business to run than the one they had, one they might not have bargained for or enjoy. It’s also not necessarily one that earns any better because the profit margins have decreased further while overhead, administrative time and expenses have doubled or tripled.

This new video explains all the many ways that billing by the hour is keeping you from earning well and serving clients better and what to do about it.

I am here to tell you that it is ABSOLUTELY possible to create a beautiful, well-earning (even into six figures) solo or boutique administrative support business that doesn’t have you killing yourself or feeling icky in any way.

If you’re ready to get out of the hourly billing trap so you can stop trading hours for dollars and start making the kind of money you can actually live on and sustain your business, be sure and check out my Value-Based Pricing & Packaging Toolkit. I can show you how to change all of it around in your business AND create a simpler, easier business to run on top of it!

Free Income and Pricing Calculator

Hey, I’ve got a little present for you today!

It’s our new and HUGELY improved automated ACA Income and Pricing Calculator that you can download for free.

We’ve offered a calculator since 2006 to help folks get conscious about their numbers and figure out their hourly rate.

However, I’ve never been an advocate of billing by the hour because it’s the least accurate way to charge for the value you provide. In fact, it actually causes you to LOSE money and earn poorly.

So for the longest time I’ve wanted to completely overhaul our calculator to walk you through the process of getting clarity around your income needs and help you calculate your pricing baseline in a completely new and different way, a way that will help you actually realize your income aspirations and look at achieving them from a different angle.

I finally got around to doing just that earlier this year, but then I got stuck on a more advanced Excel formula so I put it back on the shelf until two weeks ago when a colleague came to my rescue.  Thanks to her wonderful assistance, I was finally able to finalize our new calculator so I could share it with you today. Enjoy!

PS: Please do let me know what you think!

Should You Pass Fees onto Clients?

I came across a question that I thought was a good topic of conversation and that is:  should you pass fees onto clients?

When we say “fees,” we’re talking about all those little miscellaneous fees you get charged by your bank, by PayPal, by your merchant accounts, etc.

My answer:  No. No, you should not pass those fees onto clients. And here’s why.

1.  First of all, those fees are just the cost of doing business. They’re your problem, not your clients (and that’s how they feel about this as well).

2. Those fees are expenses that you get to write off at the end of the year come tax-time. In fact, you want to have those kind of expenses because it’s going to reduce the amount of money you have to pay taxes on. They actually help you in a round-about way. So make sure you are recording them religiously in your bookkeeping as expenses.

3. Passing on nickel and dime fees like that to clients is terribly un-customer friendly. It generates ill-will. Nothing pisses clients off more and causes resentment (which is NEVER good for any relationship) than to be nickeled and dimed like that. You should already have those kinds of things built into the professional rates and fees you charge. If you can’t absorb those kind of costs, you aren’t charging enough.

4. You want policies that generate good-will in clients. A lot of this has to do with mere perception and interesting human psychology. Clients much prefer to pay one simple fee, even if it’s higher, than having to be hit up at every turn for reimbursement of nickel and dime expenses. It just feels less to them and so it feels like a better experience.

5. It could be against the terms of use or even illegal. Don’t quote me because I’m not an attorney, but turning around and charging use fees (such as those associated with credit cards, etc.) back to the client may not only be against the terms of use of the card-issuing companies, it could even be illegal under certain circumstances. Ask your card company and your attorney about this. Better safe than sorry.

Video: Billing by the Hour Is Killing Your Business and Here’s Why

Take a look at this quick, 3-minute video. It explains exactly why billing by the hour is keeping you broke.

Let me know what you think. Are you having any “aha!” moments? I’d love to hear your thoughts and questions so please do comment or email me privately. 🙂

Do You Hate Tracking and Reporting Hours to Clients?

If you hate tracking your time and reporting it to clients like some kind of employee, you aren’t alone. I’ve been watching the results of the survey on this question and you are in good company. People overwhelmingly hate this aspect of hourly billing.

Tracking and reporting your time is a huge administrative burden in your business. Plus, it focuses clients on how long things take you instead of how the work you do helps them achieve their goals. It’s no wonder they then get nitpicky about hours–that’s what you’ve led them to believe you’ve sold them and they want to make darn sure they’re getting what they paid for.

On top of that, did you realize when you bill by the hour, you actually make LESS money the better and faster you are? Do you get that? You are penalized financially for actually providing better service. That’s ass-backwards, wouldn’t you say? Shouldn’t you be REWARDED for the skill and speed you deliver?

Because that’s what is meant when we use the word “value.” Value is about how you help clients move forward better, faster and more skillfully. Value is NOT about how much you can give away for nothing.

Billing by the hour STOPS you from earning better and moving forward in your business. It keeps you working with clients in ways that limit your earning potential and don’t leave you any room to do anything else in your business. The problem is that most people don’t know how to charge any other way. They don’t know how to structure their fees and frame their support if time is not the unit of measurement. And so they stay stuck, working tons of hours with clients, yet still struggling to earn the money they need and having no time for a life outside of their business.

I want you to know, there is a better way. And what I have to share isn’t just about a billing methodology. So much of this directly ties in with your marketing, how you are framing things and how your business is currently structured. What I have to teach you will make your business easier to run and you’ll be able to sign up and work with clients more effortlessly while making way more money.

How to Price and Package Your Support Based on Value and Expertise--NOT Selling Hours!To learn more about positioning your business with proper pricing and how to avoid the hourly billing trap, get my guide How to Price and Package Your Support Based on Value and Expertise–NOT Selling Hours!

How Working More Hours Can Mean Earning LESS Money

How Working More Hours Can Mean LESS Money

Continuing the conversation in this week’s Dear Danielle post, I’ve Lost All Boundaries–Is this Relationship Salvageable?, I wanted to illustrate how someone can be working 50 hours a week and still not be making “any” money to speak of.

I use quotation marks because, sure, she’s getting paid something. But “something” doesn’t necessarily mean “enough.”

There are all kinds of people out there in our industry who fall into the “working poor” category.

A lot of this is because:

  1. They aren’t charging enough, and
  2. They are looking at this as a telecommuting job instead of a business and so they keep working with clients as if they were still that assistant/employee, except that instead of working outside the boss’s door, they’re just working virtually from home.

That they might call themselves business owners means nothing, because for all intents and purposes, they’re not.

I see this thing all the time in our annual industry survey.

While the report that goes out to participants shows the collective/aggregate totals of all responses as a single group, I get to see the results in individual context as an admin.

What I mean is that when someone fills out our survey, their submission gets recorded as an individual number. When you click on a number (the number representing an individual, anonymous respondent), it shows you that particular number’s individual responses to all questions in the survey. In this way, you can see what an individual business looks like in the context of their individual responses to survey questions.

It’s a common to see respondents who are working with 11 (or more!) clients and still only making maybe $30,000 a year, if that.

Sometimes it’s because they aren’t charging enough. Often it’s because those clients aren’t retained clients, they are only project/one-time/occasional clients.

The ones faring the worst are the ones who are working with that many retained clients and still only making that little per year.

And they aren’t an anomaly. Many (dare I say, most) of them are making less than $10,000 a year!

There’s something definitely wrong with that picture and it’s what fuels my passion to help Administrative Consultants start earning better.

But getting back to our example, to provide some illustration, I asked the person who originally submitted the question if she would mind sharing what she was making with this client so we could work with some actual figures.

She was really embarrassed (which I assured her she shouldn’t be; we’ve ALL done things in the initial stages of our businesses that we cringe at later). Still, she very graciously obliged my request (thank you!) knowing that I always keep these things confidential and never use anyone’s real name without their permission.

If you remember in the original post, the person stated that she “took less (money) to build the relationship.”

Problem is, that “less” amounted to less than the national minimum wage that an employee would make! It certainly wasn’t in keeping with what her business needed to earn (and your first priority when it comes to earning is always what the business needs, otherwise you don’t have a business, you have a hobby).

If you look carefully at her choice of words, “took” tellingly suggests that the client was calling the shots and dictating the terms and she passively acquiesced.

To use a crude analogy, how often do we hear of one night stands turning into real relationships?

Not that this situation here is a one-night stand (sort of the opposite, LOL), but it’s the same concept of devaluing and dishonoring ourselves that leads to clients (and one-night bootie calls) not having any respect.

A relationship that is flawed from the beginning just isn’t going to grow into something better.

I point this out only because it’s so important to examine the underlying thinking and default modes that drive our actions because they are what allow us to accept things that aren’t always in our best interests.

In this case, she had relinquished ownership/leadership of her business, took a subservient role in the relationship and let her personal needs and standards take a backseat to the client’s.

In recognizing this, she knows that this will be an area of personal growth she will need to focus on and be conscious of as she continues to move forward with her business and interact with clients.

And what was she making with this client? A mere $350 a week.

So let’s pick this apart…

At 50 hours a week, that amounts to $7 an hour. Yeah, you read that right, seven dollars an hour.

That’s less than the national minimum wage that an employee would make!

And even an employee would really be making more than that if you figure in the Social Security, Medicare, vacation pay, sick leave and all the other myriad benefits that they don’t necessarily take home, but that are earned nonetheless.

At $350 a week and 52 weeks in a year, this person is only making $18,200 annually.

And actually, she’s making even less than that after you subtract taxes, business expenses and operating costs, etc.

I don’t know about you, but I certainly couldn’t live on that little money all by myself, much less with any kind of family to take care.

So yeah, she’s making something. But that something is amount to relatively “nothing.” It’s barely enough to survive and exist on.

And in this particular case, this person actually is a single mom with a high-school age child nearing college years. She is barely making enough to keep them fed with a roof over their heads; forget about any kind of money for college.

Plus, at 50 hours a week, she doesn’t have any time left to do much of anything else, let alone market or work with other clients to increase her income.

There are other things we all have to do in life besides working in our business—things like taking care of kids, grocery shopping, helping with homework, spending time with our husbands or boyfriends, exercising… um, SLEEPING.

Again, I don’t know about you, but I am a mere mortal. I’m just not going to have a lot of time and energy left to do much of anything else in my business after a 50 hour work week with one client.

Even if technically there are more hours left in the day, I’ve still got a life to live, responsibilities to take care and a finite amount of energy with which to do it all.

As you can see, this isn’t a healthy situation in any way, shape or form. It’s certainly not a business situation as she recognizes.

I can hear some folks out there saying, “Well, she isn’t charging enough! If she would just raise her rates, all her problems would be solved!”

No, not actually.

Because a) she’d still have all her eggs in one basket; b) she’d still be working in what amounts to basically an under-the-table job; and c) she’d still have no extra time and space for any kind of growth or business development.

Success is not success unless you are both making money (and by money, I mean MONEY!) and are profiting in terms of also having the extra time and freedom to enjoy it.

Maybe you’ve got the inside track, but I charge what amounts to roughly $75-85+ an hour and even I would be hard-pressed to easily find clients willing to pay $15,000 for 200 hours of administrative support a month.

And not that I would ever advocate this as an adequate, sustainable professional fee, but even if she was only charging as little as $20/hr, that’s still $4000 a month. While there are clients in the world who can afford that, how many of those kind of clients is she (or any Administrative Consultant) realistically going to find at this stage of her business?

Even if she did, that still doesn’t resolve the problem of working that many hours, having time for a life and doing anything else in or with her business.

When you are operating a business, it shouldn’t be in what amounts to the role of an employee to your clients.

And dammit, you have a right to want more, to want better, for yourself and for your kids and your family!

You have a right to not settle for merely a meager, subsistence income that you have to work your ass off just to get! That’s never what business is about!

This is why, like I say, it’s infinitely easier to find and work with a handful of 20-hour a month clients.

The work is more broken up. It’s easier to give superiorm high quality attention to each relationship. AND you’ll have room to grow or take on other kinds of work, clients and projects in your business if you so choose, not to mention a healthier amount of time left for the rest of your life and to simply BREATHE.

To put some numbers to this, let’s go with a nice middle of the road fee of $50/an hour. If you had 5 clients each on a 20-hour retainer of $1000/mo, that’s $5,000 a month. That’s almost four times the amount she’s making with that one full-time employer-client.

Obviously, that’s before taxes, expenses and operating costs, but you get the idea.

It’s still a very nice, healthy income, much more than what most of us ever made as employees. And she wouldn’t have all her eggs in one basket. And she’d have more time, space and energy to work on developing her business and living life. Because with 5 clients at about 20 hours a month, that equates to roughly 25 hours of client work per week, more or less.

This is why you have to understand your role differently and redefine that role. You will never create the kind of circumstances I’m talking about here by working like an assistant to your clients.

AND, if you get away from selling hours entirely, your potential skyrockets for reaching a six-figure business that doesn’t have you working slave hours to earn it.

What Is Your Pricing Saying About You?

Do you realize that your pricing sends a million messages to your prospective clients? Pricing is every bit a part of your marketing strategy. And no, I’m not talking about being the cheapest provider—that is always a losing proposition for both you and your clients. And here’s why:

1. What is your pricing saying to clients about you, your skills, your services and/or products? If you price too low, clients will view you as merely a commodity they can get from anyone, anywhere else. Low-ballers think that by pricing low, they will create even more opportunities to find clients. However, what it really does is open them up to an even bigger pool of competition–and not particularly good company (remember what they say about the company you keep). It’s a losing game and they have to work doubly hard just to get noticed and break even.

On the other side of the coin, clients correlate higher fees with higher skill and expertise. They expect to pay professional level fees where that’s the case. If you aren’t charging professional level fees, they innately think the skills and experience must be sub-par.

2. What kind of clients does your pricing attract? Cheap prices are a lightning rod for cheap clients. And cheap clients are the very worst clients to work with. They don’t value the work, they’re constantly trying to get something for nothing, and they nitpick and find fault with just about everything you do for them. Cheap clients are unprofitable and energy-draining to the extreme and cost you far more than you realize in your business.

You want to market to clients who have foresight and seek to invest in quality and expertise. These are the clients who understand that quality and expertise are far more valuable to them—and ultimately cheaper in the long run—than short-term cheap prices. They value the work and skills because they know how those things, in turn, help their own business move forward.

3. How does your pricing affect your operations and systems? If you have a complicated pricing structure or turn everything into a transaction, it makes it more difficult for clients to deal with you. And difficult, complicated and confusing is not good marketing. When your pricing and, thus, billing structure and procedures are complicated, you create even more administrative work for yourself. Whenever you have overly complicated, burdensome overhead and administration, that ultimately ends up detracting from your client service in one way or another. Simplicity is the name of the game. When you make your business easier to run, you make it easier for clients as well—and you have more time to serve them.

Likewise, if you aren’t charging enough, your business will not survive. You simply must charge profitably in order to stick around and continue to serve the clients who come to depend on you. You aren’t doing anyone—not you and not your clients—any favors by not earning well. Because your money problems will eventually affect your business and trickle down as service problems for clients. Pricing well is imperative for your business survival and the ability to create conditions that allow you to provide superior service to clients. And you can’t buy better marketing than the kind of word-of-mouth that is generated from that!

ACA Value-Based Pricing & Packaging GuideTo learn more about positioning your business with proper pricing and how to avoid the hourly billing trap, get my guide How to Price and Package Your Support Based on Value and Expertise–NOT Selling Hours!

Business Costs Money

I came across a Google Alert recently where a colleague posted to a forum about a certain font she needed to complete a project, mentioning that $25 for the font license was a bit steep.

I had to chuckle because I’ve paid hundreds of dollars for a single font.

I realize most people in our industry start their businesses on a shoestring rather than properly capitalized. Still, they have to understand that being in business does cost money.

There are going to be times when, if you want to be smart in business, you are simply going to have to cough up money. You can’t expect others to provide everything for free (just as you don’t want clients who expect you to work for free). 😉

That said, there are a couple things this colleague (or you) can do:

  1. Go ahead and purchase the font license. Think of it as an investment, not an expense. You’ll be able to use that font for future projects so it becomes an investment in your library of design resources. AND you can write-off the cost come tax time next year.
  2. Charge the client for the cost of the font license, particularly if you’re only purchasing it specifically for that client’s design project and not one you will ever use again. If the client doesn’t want to pay for the font, then you simply inform the client he or she must choose another font. It’s not your responsibility to bear their business expenses, and this is part of the cost of completing their design project. The choice is theirs.