How to get the client the review the contract if the workload has changed

Question

A year ago I agreed a fulltime contract which was convenient for us both. As the project grew the workload became higher and the customer had financial problems leading to decreasing of working hours that had fixed hour rate even to partial pauses for several weeks. This is a financial problem, most contracts in this area are fulltime, new clients demand fulltime envolvment. I've discussed this problem with the customer and proposed to review and change the current contract, to my current worload and work time. This was ignored. I'm not willing to break the contract, how can I force to change the contract to overcome the financial problem?

Update: This is a general question because we are a small team of freelancers suffering from same problem. For workload I mean, that we are doing stuff that was not discussed when we agreed to work together and this costs higher.

For example, we agreed 10$/hr for 40hrs/week. So a fulltime contract. After the project has grown more work is needed to be done, which requires for the contract to be reviewed. We are doing this work with the same hour rate, because we had good working relationship. Things have changed, the customer offers only 15-20hours to work, so I obtain 50% of payments. He doesnt want to review the contract as he will "soon" find investors and I'll get the same 40hrs. But that does not happen. New customers demand 40hrs/week envolvment. So to work on new people I need to termnate the current contract or live on receiving half or less of agreed payments. On the other hand, the new customer agrees to pay more $/hr as this is the new average hour rate for this work.

Update2: The pay rate was agreed when we had 40 hr/week to make agreed work. Currently the amount of work is the same as for 40hrs but the client demands in 15hrs. This an ongoin project that grows in functionality very quickly.

Answer 1

This one's pretty simple. Unless you are limited by your contract, send your client a written notice:

"Dear Client:

As of [Date], our current economic situation will require our clients to pay for a minimum of [number] hours per week, whether that time is actually used by our developers or not. We thank you for your past business, and hope to continue working with you in the future."

I noticed in one of your comments that you seemed concerned with whether the client will "be angry". Friend, you are in business. People are important, that's for sure. I don't know where you're located but I can also say for sure that if you are running a business, you're paying for electricity, maybe office space, water, etc. When you don't pay your rent, no one gets angry - the landlord kicks you out; it's NOT personal. When you don't pay your electric bill, they just turn it off; again, no anger, because it's NOT personal. That's how business works. You can't treat your client like a charity case, or you won't be in business very long. Or if you WANT to treat your clients like charity cases, open an orphanage and get out of the web business (smile!)

Best regards.

Answer 2

If I understand correctly you need the 40 hrs to make this contract worth while because the hourly rate is too low. Currently you only get 15-20 hrs per week and this will not increase. Your options:

1. Negotiate new rate
2. Cancel the contract and find a new project

As long as you are transparent about this there does not need to be a conflict. Explain to the customer that you understand his financial situation but that you also need to think about yours. If he cannot offer more hours or a better rate you cannot afford to continue this project.

However, keep in mind any legal or contractual issues concerning the cancellation of the contract: it may contain a notice period, a fine for terminating or any other stipulation that would get you in trouble if you cancel.

On a side note, it is better not to take contracts that are only feasible if you get enough hours. Stick to an hourly rate that works OR add a mandatory number of hours per week in your contracts that you can invoice.

Answer 3

If negotiation is getting painful, get a lawyer. Why?

1. Freelancing is hard enough without spending mental and emotional energy with this kind of thing. Let someone else handle the unpleasant talks.
2. You are a business, not having legal counseling is something you can't afford.
3. I like to think all business start with the best of intentions from both parts, but often things go wrong. You need a hired gun to make sure you will get paid no matter what and to cover your ass (last thing you want is exposing yourself to liability).

I could not put it better than Mike Monteiro (Design Director and co-founder of Mule Design Studio) did on his CreativeMornings talk - I wish I had watched this video when I started freelancing.

In some countries you can get free or affordable advice from your union or small business bureau.

[update]

For every relationship problem in life (professional or personal) there are always 4 alternatives:

1. flee: get another job
2. change the other (tricky one): make him pay for the full month
3. change yourself: cut expenses?
4. suffer.

Are you choosing number 4?

Another tip: if you are a group of contractors working for the same client, avoid collective negotiation - it is always easier to get a raise for yourself than for a dozen people.