[Courses] [Spineful Living, Lesson 4: Saying No!]

[Jacinta Richardson]

Gloria W wrote:

> I'm having trouble with this right now. I didn't exactly quit my 
> previous full-time job to go freelance. I kept them on as a client. 
...
  Now there is only maintenance, and it is boring as hell.
> The CTO convinced me to take a low hourly rate once I switched to 
> contracting, because he does not support contracting, but did not want 
> to lose me. I did not negotiate because I felt badly about leaving.
> 
> Now I feel resentful for taking such a low paying contract, since my 
> other, full-time contract is twice the hourly rate of this one.

A couple of years into our business, we hit a snag just like this one.  We had 
some clients who we felt we owed, because they had been there at the start and 
by paying for our services helped us get our business happening in the first 
place.  But they were still paying our early rates and we were sufficiently well 
established now that we were able to charge new customers much more.  Further, 
their work was indeed boring.

So we ummed and ahhhed about how to best fix things.  And we fixed upon a good 
solution.  With one client we had a yearly contract, so when they came due we 
told them that we were increasing our rates and did so.  We didn't jump to the 
full amount we were charging others, but we significantly reduced the gap and 
also improved our working conditions.  We explained that they were receiving a 
discount from our other clients because of our long association and also because 
they gave us so much work (about 12 paid hours a week).

Another client didn't have a contract at all, it was just an informal agreement. 
  So we told them that as of a couple of months time we were moving all of our 
clients onto contracts.  We phrased it in such a way that it kind of sounded 
like a good deal to them, but mostly we let them see that it was a CYA action on 
our behalf.  When drawing up the contract we did much the same thing as with the 
previous example, we told them that other clients were paying $Y an hour and 
that because we valued them we would give them a 25% discount.

A final example was a client who usually asked us to do fixed priced jobs.  I 
started contracting for her about 5 years before we started the business at 
$20/hour.  As we got busier and thus as our time became more valuable, I just 
increased the unit cost of my time in her quotes.  She accepted less of them, 
but that didn't really bother me.  I don't feel I was ripping her off, as I had 
learned a lot in those years and thus could give her better work - faster.

Now I'm not sure at what stage your business is at.  If you only have two 
clients, you are definitely in a weaker position than if you have a few more. 
As you said, it certainly makes tax matters easier if you have multiple income 
sources.  It might be a good idea to grin and bear it at the moment while you 
also try to pick up another client or two.  On the other hand, there's no time 
like the present to ask both of your clients to sign contracts.  These should 
ideally stipulate:

	* amount per hour, plus taxes if required
	* minimum amount the contract is due (for example 1 day a week for a year (50 
weeks) with 7 hours a day: 350 hours.  We usually based our minimum on 80% of 
that: 280 hours.  Thus they agree to pay you a minimum of 280 hours work between 
the start and end of the contract.  This is where you state that you're giving 
them a discount because of the large amount of work they're giving you.
	* minimum engagement time if you're called to their premises.  We usually say 
that if we have to visit them we'll charge a minimum of 4 hours.  Of course this 
doesn't need to apply, so meetings and lunches can be uncharged.
	* indemnity - they won't ask you to perform anything which is illegal, and they 
grant you full indemnity from all consequences of work you perform under their 
instruction.  (For example if they ask you to copy someone's website design, or 
scrape someone's articles - it's their fault if that someone gets upset).
	* phone call charges.  We never actually added this to our contracts, before we 
gave up on our needier clients, but I recommend it.  If any of your clients tend 
to call you a lot; charge them for it.  Tell them, that you're very happy for 
them to interrupt you (assuming you are) but that you'll charge them for the 
call time and work that generates in 15 or 30 minute blocks (depending on how 
nice you are and how long these calls usually take).  Make sure that your block 
size is big enough to give you about 10 free minutes after each call.  This is 
to allow you to record the charges, send them a summary of the telephone call 
and finally to context switch back to whatever you were originally doing.


Remember that contracts do not have to be fair (beyond the obvious requirements 
of legality).  If you're writing it, you can make it as beneficial to yourself 
as you want without having to explain or justify yourself.  If they don't like 
those clauses then you can negotiate and come up with ones that are more 
suitable.  If they sign what you give them, then you're happy.

As another useful business tip, make sure you have a good task tracker.  We use 
RT (request tracker) by Best Practical, but there are other good options as 
well.  Ideally your clients should be able to see their own queue, create tasks, 
comment on tasks etc.  RT provides both email and web interfaces and we use it 
to track all of our correspondence and phone call information.  It's great to be 
able to say: on the 5th of January last year you wrote .....

All the best,

	Jacinta