For a regular service fee (i.e. website maintanance, fixing bugs, keeping it online etc), what is the best way to charge and invoice? Assuming I bill $50 monthly, should I ask for 6 months upfront to avoid chasing a small amount of money or send an invoice every month?
4 Answers
Knowing they have options usually makes people happy. Offering recurring billing and lump-sum billing is also a great way to increase your income without doing anything. For example, not every client can or wants to pay for 6 months or a year upfront, but it would be a help to you. So offer a "discount" on your lump-sum billing by tacking on an additional fee for recurring billing. That way, clients who pay upfront for a whole year pay less than those who pay upfront for 6 months, and those clients pay less than those who pay monthly. An example scenario:
- One annual payment: $600
- 6-month payment: $315
- Monthly fee: $55
You can still advertise your rate as $50/month, with the caveat that that price is for paying a full year in advance. Or you can advertise that your rate is $55/month, but you give discounts for paying in advance. Either way you're not taking a hit, you're encouraging people to pay upfront, and you look like you've put a lot of thought into this.
Like someone suggested, PayPal recurring billing is one option for handling monthly payments. I personally use Freshbooks, which automates invoices, still allows PayPal payments, and has other easy payment options. The ability to set and forget is important so you can spend less time on administrative tasks and more time on your real work.
Why not both?
You might want to look at offering a 3/6 month support package (with the basics thrown in), bill for it up front and then have ongoing support on an hourly rate once the package ends. This will guarantee you the money, while not putting the customer's nose out of joint.
Don't be afraid of monthly billing either. It's very easy to set up (either bought or self-made).
Use a credit card service that allows recurring monthly payments, or Paypal's recurring payment facility. Invoicing the same amount each month for such a small amount will waste a lot of your time - printing, mailing, visiting the bank. Set it and forget it.
Shamless plug here but if you use Xero, Zoho or Reckon for invoicing then my app will look after credit card pre-approvals and automatically charge your client on the due date. You can also use it manually without an external invoicing system.
