Value and pricing: How much would you charge in this case

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I just spent a couple hours helping a client out with something. Question for you: Should I charge for a couple of hours?

Of course not.

The client asked me for help for the following reasons:

– Their internal person has been unable to do this project for 4 weeks.

– This same person acknowledged that she would have needed 3 days to do the work that took me 2 hours to do.

– By doing what I did, the client is set up to receive at least hundreds of thousands of dollars in funding.

So what would you charge in this case? Do you cave in too often and charge by the hour instead of your value?

(By the way, I am charging nothing for this work. This client has a major project coming up, and I used these 2 hours as an investment to build the relationships. We have been working together for some time, they have been a great client, and I am willing to forego a couple of highly valuable hours to secure a fun, high-paying and long-term project coming up). Curve ball!

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  • auveeb

    If it’s that big of a project, it would look nice on a resume/portfolio. I probably wouldn’t charge anything if I had a history with the client.

  • EagleEyesDesign

    “We have been working together for some time, they have been a great client”

    Yes, those are the key words. In that case, the client will be very grateful to you and will never forget it. And no doubt super impressed at the speed of the results. NOT charging is the smart thing to do. Even if you don’t get that big project (though you most likely will), that person is going to “go to bat for you” for any project or place she manages in the future.- Christina

  • JMorrow

    Perfect example of how to use reciprocity to your advantage. Now that you’ve done a small favor for the client, they are psychologically indebted to you. The only foreseeable way to repay you (and still get great value from you) is to hire you for the big project.

    The same principle applies to, “I’ve given you these free articles… the least you can do is buy my book.” But on a much larger and more monetized scale.

  • http://www.tpdevelopment.com.au ricktu

    Personally I would do the same thing. I do a fair bit of networking and amongst those business people as well as my clients if they have a question or need a little help with some thing they are straight on the phone to me and I make myself accessable to them. This may use up a bit of time but the point is these people are happy to refer work to me because I have not only proved I’m honestly out to do my best for them but having solved all their problems in the past they have proof I know what I am talking about. And for those issues where I can’t help them I tell them so but them point them in the direction of someone who can. Thereby reassurring them that I’m honest.

    I’ve had a few people comment that I am too accomodating to people but I won’t change form being this way. Apart from the fact it makes for pleasant working relationships it also means I have a loyal client / colleague base which is starting to really pay dividends.

    Richard.

  • http://www.eleytech.com beley

    Andrew, your insights are really dead-on. I have potential clients call me all the time wanting a little job here and there… just a few hours. They think it’s no big deal, I should just be able to “fit it in” and charge them my normal hourly rate. It doesn’t work that way. First, potential clients haven’t shown me any value whatsoever. For all I know, I will drop everything to work a few hours, make a few hundred bucks and never hear from them again (this happens more than not). I have a policy not to take new clients unless the project is of a certain size, and I rarely bend the rules.

    I have projects going on, and those clients deserve top priority. If a new clients wants several hours of my time, they’ll have to pay for it. A lot. If they’re willing to pay the minimum project size for new clients, I’d be happy to work with them.

    However, as you noted, this was a current client (and a good one) and you’ve got a big potential project coming up. Instead of charging for the work, you made one huge deposit of trust and dependability into that client’s “bank account” with you. I’m sure you were in the positive already, but with this sizeable deposit, it’s unlikely they’ll even consider anyone else for that project coming up.

    Sometimes it’s not about the money. Making “deposits” into clients’ “emotional bank accounts” is very important. What someone will consider a deposit is subjective, so you really have to learn about what your clients value so you’ll know what they consider a deposit. Check out “The 7 Habits of Highly Effective People” by Stephen Covey for more info on emotional bank accounts. It’s a great book!

  • Jake

    I’d charge $20 and get them to throw in a meal at Burger King!

  • http://www.cre8media.com egockel

    “they are psychologically indebted to you.”

    Last I checked, Karma didn’t pay my rent.

  • Jason

    “they are psychologically indebted to you.”

    Last I checked, Karma didn’t pay my rent.

    If you’re a good business man people will be paying you rent from one of the 5 houses you own on the side, lol.

    Good article Andrew but you need to stress the INVESTMENT point. You’re talking pre-contract right? After, well let no value go uncharged ;)

  • shadowbox

    Good move if it’s a valued client with a track record for sending you lots of regular, quality work. I certainly give up some free consulting for my ‘premium clients’ for the greater long term good.

    But beware of new clients or simply propsects wanting the same treatment.

  • dev_cw

    This can be risky since you are not guaranteed that the client will actually do the new project with you anyway. I would consider the time spent an investment. I have done this several times with established clients (never with new clients) and sometimes it works out, however in many casses I am invited to send in a proposal for the next project, and am told that I am at the top of the list, but the client will end up going with the lowest bid.

    Also it seems that in some cases the client will get acustomed to getting free work and will expect it the next time they need you…”but it will only take you few hours”.

  • http://www.eleytech.com beley

    dev_cw, it is an investment, but I think you’ve got a much bigger issue. If most of your clients only work with you for one project and move on to the lowest bidder on the next, you’re doing something wrong.

    If you provide a real value to your customers, and help them meet their objectives and goals (which are hard to find out sometimes) then they wouldn’t think of going with another firm, regardless of price.

    We have a client that calls us in on absolutely every project. They actually call us before – they see us as a valuable member of their team and ask our input before making big technology-related decisions.

  • Gator99

    Most of the time a fee schedule would be worked out ahead of time. Do you want to charge higher than your normal fee, simply because of the client’s situation? What if you were selling your house and the painters charged you higher than their normal fee because they knew you’d get more for the house? Doesn’t sound like anyone I’d want to do business with.

  • Anonymous

    Ok. Say this person came to me, but there wasn’t any project coming up. Should I charge them?

  • http://www.eleytech.com beley

    Ok. Say this person came to me, but there wasn’t any project coming up. Should I charge them?

    I charge as much on convenience (or inconvenience) as I do on value or hours worked. If they’re a new client and you have no idea whether they’ll become a regular, charge them accordingly. For a couple hours, you have to put all your other projects on hold, then you have to deal with billing them and collections, setting them up in your accounting software, going through the whole pitch/sales process just for a few hours.

    I turn down a lot of small jobs because of this. I won’t even touch most jobs sub-$1000. It’s so much of a hassle that it’s rarely worth it, and most of these prospects are just hunting for the lowest bidder anyway. You might get lucky this time, but you’ll rarely get repeat business.

  • EagleEyesDesign

    I wish I could tell beley to send those under $1,000 clients to me! No time until summer, though, argh.

    But IF those smaller projects come from the right kind of people, (honest, treating you like you are one of the team) those small jobs have always turned into larger ones for me.

    Again today, my used-to-be-small-project clients are once again calling to add even more stuff to their sites. Have gone past the $30,000 mark and no one would give them the time of day 3 years ago, and their business keeps improving. That may not be enough for most developers, but the lack of stress saves money in therapy later. (Just can’t handle stress.)

    But yes, if brand new clients I also do charge. That weeds out the “grinders”, as discussed on the SitePoint forums! WOW that info helped. – Christina

  • http://www.frixer.com petertdavis

    Doesn’t that devalue your time in the eyes of the client though? Now they’ll expect freebies in the future too.

  • http://www.eleytech.com beley

    Doesn’t that devalue your time in the eyes of the client though? Now they’ll expect freebies in the future too.

    Not neccessarily. Your clients should see the value in your time. If they value you before and you provide them with a service or perk here and there they’ll most likely see it as great customer service.

    I don’t bill for every single hour. I often have clients that will call me with a problem and I’ll talk to them for 10-15 minutes and not bill them. They are all very aware that I can and often do bill long phone calls and any meetings, but it’s nice to do something like that occasionally.

    As I mentioned above it adds a deposit to the “emotional bank account.” Of course, for it to really be a deposit, your client has to recognize it… if you do it all the time, or they “expect” that kind of service, it’s not going to do you any good.

  • jright

    As I mentioned above it adds a deposit to the “emotional bank account.” Of course, for it to really be a deposit, your client has to recognize it… if you do it all the time, or they “expect” that kind of service, it’s not going to do you any good.

    You took the words out of my mouth, beley! When a client calls you with a task or project, the are (or at least should) expect to pay for it. I think the fact that it was 4 weeks past due, and was supposed to take 3 days, but you got it done in 3 hours is more than enough of a deposit in the ‘emotional bank account’. In my opinion, whether you charge this client nothing, or $300, they will be just as happy. So why not charge what you’re worth? I totally understand not charging for phone calls, or things like “can you help me set up an email account”. But if something goes for a few hours, and I’ve saved them quite a headache, they’re more than happy to pay you for you services. Also, by not charging them, you may be putting out the message that your time isn’t worth that much. That’s my 2 cents.

  • codeninja

    We took on a small project for a small site. about a year ago… a simple “make this form link to paypal” type of job. We didnt charge the guy for it but instead asked him if we could put his site on our portfolio, and be named as his web master…

    The client agreed, we did the work, and periodicly checked in to see if he needed anything done…

    that was 9 months ago, and today we are working for a $30,000 project for him… I’d say that was a valuable investment of 30 minutes worth of work.

  • Gareth

    Of course you’re not going to charge for something that is an investment for the future. When you invest in a stock do you expect the broker to give you a dividend straight away?

    However, I think this raises a broader question related to how consultants structure fees. Personally, I think charging for hours is a no no when people are paying for knowledge that you’ve acquired over many years. As a PR consultant I see this issue all the time. Sometimes I can solve a problem in 5 minutes because I’ve dealt with it many times before. Or I can think of a creative way to explain something very quickly because my brain is wried that way. But do I charge for 5 minutes of time? No way.

    The only way to deal with this issue is to ask the client “How much is solving this issue worth to you?”. Then, frankly, it’s up to you how long it takes to solve it.

  • http://www.kostam.com kosta

    Not charging for a couple of hours is tricky – one may be left without both client AND money, and as someone already mentioned, they may not value your time at a later point.

    I think I will stick to “Never work for free”. Compensations are a different story, though.