thread's not dead - doITlab

This is where the flaws in the flat-rate billing system begin to surface. What
does a “logo” really mean? We could spend 1 hour on a logo and we could also
spend 50 hours on a logo. So you either create a crazy scale of products like
“simple logo design,” “average logo design,” “complex logo design” and “ultimate
logo design” OR you switch to hourly billing.
In the end we decided to switch to hourly billing. This IS how most service industry
firms work. If someone asks for a flat-rate we don’t turn them down, we
just talk about their project and get all the details before we give them a rate.
How can I avoid being stiffed?
Over the years, particularly early on, both Bill and I got stiffed a lot. Eventually,
Bill found one little trick that prevented this from happening:
Require a deposit before you begin work.
It’s simple: if someone wants to hire you for a $300 project, tell them you require
a $150 deposit before you start. That’s it. This one little step will eliminate
95% of people that will eventually stiff you.
We usually try to get a 50% deposit before we start, then clients make the final
payment when we’re done. If the project is really big then we will reduce the
deposit to 33% or 25%. If someone wants to take advantage of you, they don’t
want to make any payment at
all. By requiring a payment
up-front you scare off the Require a payment before you
jerks. If someone balks at
making a deposit, they prob- start and before you release
ably never wanted to pay you
a dime in the first place. Be your files to avoid being stiffed.
happy they are leaving your
life. You’re better off for it.
One exception to this is working
with big corporations. If Pepsi says: “Bill us, we will pay you in 30 days.” I
would tend to believe them. If they stiff you, go get a lawyer and sue them. They
have lots of money and the lawyers would love to help you sue Pepsi (for the
record: Pepsi has ALWAYS paid us.) This brings me right to my next topic:
THREAD’S NOT DEAD • Jeff Finley
Should I have contracts?
My quick answer is: Skip the contracts for little fish and small projects, have
contracts for big fish and huge clients.
A contract is only good if you can enforce what it says. Let’s say, for instance,
that you design a $300 t-shirt for band and you make them sign a contract.
Then let’s say the band stiffs you. What now? Do you wave the contract in their
face and say: “Or Else!” No, you go
to court – which Bill has done in exactly
this scenario. And when you get
to court, the very first thing the judge
will say to you, as he did in this case
is: “The court is not a collection agency.
You have to collect this money on
your own.” So, the band never shows
up and you win the case. Now what?
Well, you can go back to the band and
say: “HA! I won the court case – now
pay up!” And they’ll probably laugh at
you. If you go to a professional collection
agency they won’t touch anything
for less than a few thousand dollars.
Go Media president Bill Beachy
And if they DO succeed at collecting
any money they will keep about 20-
40% of it.
So, now you’ve spent all the time writing the contract, going to court, hiring a
collection agency and sleepless nights worrying about this bum, and for what?
You will still probably get stiffed.
This is what happens when you’re dealing with little fish. The scenario changes
when you’re working with bigger companies and bigger projects. Obviously, if
you’ve been hired to do a $200,000 project – you might want to get a contract
written up. You’ll want this because one, you probably have a lot more at risk.
You may need to devote months of your time to the project, hire more staff and
buy more equipment. And two, in the event that you are stiffed, there will be
lawyers willing to help you collect. They will likely be able to get good use out of
a contract in a trial. Go Media will only mess with contracts for projects over 50k
and those are typically web development projects, not t-shirt designs.
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