allerlayI recently needed legal support and contacted several lawyers in my area. Two offices were shortlisted, one with a cost estimate and one with a flat-rate. The office of the lawyer, who charges hourly, is closer to my home, so I chose her. I thought this would make personal meetings easier.
Artificial job creation
It turned out to be a bad decision. She had no interest in working efficiently. On the contrary, she had many things done by a new employee who had little or no idea about the matter. So there were several correction rounds and the lawyer charged everything 1:1 to me. All the corrections of the mistakes her employee made. It seemed like artificial job creation, was frustrating and culminated in me changing lawyers.
Flat-rate ensures greater efficiency
The lawyer who had made me an all-inclusive offer showed a completely different picture: he worked efficiently, competently and purposefully – because he is not interested in making unnecessary corrections. He isn’t earning more money when he delivers sloppy work and then has to make corrections. Because I don’t pay a cent for every extra minute he spends on my case.
Isn’t it risky to have an all-inclusive deal?
As the client, I naturally asked myself first: “What if he spends less time than he charges?”
Yes, that may happen. Two reasons show me, however, that it is not unethical of him to do so:
- If he works more hours than expected on my case, he alone bears the risk (unless I have extra wishes, more about that later).
- I don’t just pay him for the time he spends to provide me an excellent result. I also pay him for his expertise, knowledge and experience. Quality has its price.
So the question is: How much are you willing to pay for excellent work?
Calculate correctly to reduce your own risk
This experience leads to a rethinking for me as an entrepreneur. But as mentioned before, I take the risk if I make a miscalculation and a job takes much more time than expected.
How can I reduce this risk?
- I rely on my experience when I make an estimate. I do this estimation for myself and do not pass it on to the potential client, broken down by hours.
- I add a buffer to the estimate. Under no circumstances should the calculation be carried out too tightly in order to win a client. Sooner or later this leads to frustration on both sides. I want to do a good job that is worth the money. I don’t want to pass the consequences of my own miscalculation on to the customer. Because: If I deliver good work, the customer will be satisfied. This, in turn, is the foundation for long-lasting cooperation based on trust and appreciation.
- In order to avoid disappointment on both sides, it is important to define the scope of services precisely. What does the customer want, what do I deliver in what form and how much does it cost? If the customer’s wishes change during an ongoing project, any additional costs must be communicated immediately. I used to shy away from this and didn’t want to appear petty. But my experience shows that it pays to talk openly with customers about additional costs as soon as they become apparent. And not just at the end of the project.
Conclusion: It’s better to charge by the project
After my (unfortunately bad) experience at the other end of the negotiating table, I come to the conclusion: It is better and more transparent to charge by the project. It requires precise calculation and also a good portion of self-confidence. Because I stand up for myself and say: I have the necessary know-how to deliver top quality. And this may cost something.
How do you do it, dear Solopreneurs, Entrepreneurs, Freelancers, and Self-employed People? Do you bill hourly or do you use flat-rates? And what are your experiences? I am looking forward to your inputs and comments.