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When you work from home or from your own office and charge by the hour, sometimes during contract negotiations a new client wants to know how they can trust that you won't add some extra hours to your invoice and overcharge them, especially when they haven't had much previous experience using contract work or if they've been burned in the past by another contractor or one of their own employees.

What's a good strategy to make a new client trust you when you haven't yet had the opportunity to build the trust? What kind of time tracking or reporting methods could you use (and tell to the client you use them) that are trustworthy and easily verifiable by the client?

  • 2
    "verifiable" would greatly be determined by the kind of work being done. – Scott Aug 18 '13 at 19:40
  • Let's assume information work (design, writing, programming) – JJJ Aug 18 '13 at 19:42
  • @Scott Any work can be verified if you record your work process. Such record is what clients seek for. – Peter MV Aug 19 '13 at 14:05
  • Not sure about that Peter. For example a photo search can take quite a while and I don't know how you would record anything as verification you spent XXX hours looking for an appropriate photo. – Scott Aug 19 '13 at 18:58
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    A new client will have to make that decision on faith, and previous feedback until you prove it - one way or the other. An old client will know already... – Everyone Aug 22 '13 at 19:17
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Frankly, this asks the wrong question.

Even if you can verify hours worked, how can the customer tell you aren't "dragging your feet" - working slowly to increase your billable time? Or using some other nefarious tactic?

Good business relationships rely on trust. You need to trust them, and they need to trust you. If you are starting a relationship with a new client who does not trust you, you are starting from a hole that you are unlikely to climb out of.

Instead, you must start the relationship with a default position of trust. You must trust that they will behave as a honest and responsible adult, and they must trust you to do the same. Then both parties must do nothing to make the other party regret this trust. This means:

  • Always tell the truth
  • Be fair and reasonable when there are questions of scope
  • Don't assume the other party is evil

Of course, if either party sees evidence of dishonesty or bad behavior, then this is a different story. But a project will not be successful if one party distrusts the other party. And acting like it is reasonable for the other party to mistrust you when you have done nothing wrong does not help. They may have been mistreated by someone else, but that someone else is not you.

I agree that charging on a per-project basis can reduce this fear (I use this approach myself), but it doesn't really solve the problem. There still can be disagreements about scope that translate into questions of integrity.

Don't fall into the trap of assuming that their concern is reasonable. Treat them with respect and integrity, and expect that they treat you the same way.

  • Not sure it's the wrong question - seems like it's about how to establish the trust that is needed. Not sure you have to default to trust - there are ways to at least validate that trust early on (instead of just passive observation of the other party). – Tim Lytle Sep 3 '13 at 15:34
3

"design, writing, programming" is not clear enough either. With Design there is a creative phase which can't really be verified. Such a creative phase can take 20 minutes or 20 hours. With writing there could be a creative phase or even a research phase which is also difficult to verify. With programming there isn't the creative phase, planning maybe, but not creative.

Honestly, it is slightly offensive to be seen as a thief first regardless of any past experiences on the part of the client. And it's bad business on the part of the client if they immediately express to you they assume you're a thief.

However, to alleviate things you can do the following:

  • Assure them you are accurate
  • Provide client references the new client can contact
  • Provide detailed, itemized, time reports
  • Be prepared to defend every dollar you invoice

The #1 thing to alleviate this is to simply bid/bill per-project and provide hard quotes for the work to be done. This ensure the client pays what they need to pay and doesn't allow any cost creep. For new clients I often bid per-project with an explanation that I'm happy to bill hourly but per-project eliminates any surprises when an invoice is sent. Per-project pricing places the onus on me to accurately calculate the time needed to complete a project rather than on the client to pay me whatever it may take.

In reality, I never bill hourly for anything other than minor revisions. And I still provide the client with time estimates so they are aware of ballpark costs. I may use my hourly rate to calculate per-project fees, but it is rare that actual design is priced hourly. In my experience, pricing design hourly just serves to get you working far more than you should be. For many creative projects you may find this question at GraphicDesign.stackexchange.com helpful.

1

To me it sounds like this person will have a hard time trusting you no matter what. If you're inexperienced I would push away from billing per project because it would depend on you properly estimating how long it will take. Giving a time estimate for smaller parts of the project might be worthwhile because it gives the client some knowledge ahead of time about how long something should take. However this does mean you need to sit down with the client for at least an hour to flesh out some of his/her needs.

If that doesn't work, you might try getting a smaller project or part of the main project as a paid trial to try to raise the client's trust of your abilities and how quickly you get things done. Pick something that will take maybe two weeks. Worst case scenario, you only wasted two weeks on a client that won't be happy with anything, and you still got paid for it.

1

The bottom line is that you need to establish a relationship with the client. If they don't trust you to bill them fairly - they why are they trusting you to do the work correctly? Of course you know that, since you're asking how to establish that kind of relationship with new clients.

Here's a couple of ways:

Do something small first. If you can, pick a simple deliverable, where the client has a good idea of what time it should take. This doesn't prove that you'll be honest about things when the client doesn't have a good understanding of the time it should take, but the goal is to find something you both can be comfortable with at the start - to establish the trust needed down the road. Before signing that big contract, find something small to do. This also helps avoid costly, drawn-out interviews, as it's essentially a paid trial.

Overestimate your time. At the start, if you consistently beat your estimated time, your new client will realize you're not trying a bait and switch. At the core, their fear is that they'll approve some project / task assuming a cost, and that cost will grow. Under-estimating to get approval will break their trust as much as padding hours. But at least you can prove you're not doing the former. For this to work well, you need to give estimates on small tasks, not large projects.

Outsource the trust (at least to start things off). This is going to probably be the most controversial. I'm a full time contractor / freelancer, and I do all my hourly billing through oDesk (and have done that for years). One reason I do that is they make it easy for me to trust that the client will pay me (they guarantee payment), and they make it easy for the client to verify that I'm working (they take random screen shots, and record keyboard / mouse activity levels). And that helps both parties feel comfortable when there's no prior relationship (a cold contact, not a referral through someone you mutually trust).

I do all three regularly. I don't estimate large projects, I work with new clients to find the smallest possible thing we can build - so they can feel comfortable spending a little money to evaluate my actual work. I also overestimate the time on that first deliverable. Yes, I loose some potential clients because of that - but I don't really want clients that are so tight on their budget that there no wiggle room. In that way, the process is a kind of trial run from my perspective as well.

And as mentioned, I use oDesk for all my hourly contracts. Even if the client contacts me directly, I have them signup and hire me through the platform (for more reasons than what is stated above).

I'm a contract developer, this works well (I believe) for the kind of work I do. It may not work well for other kinds of contracting / freelancing, but I think it's at least worth considering.

1

I have had the same clients like yourself. I also hired an agent whom I asked how can I be sure that his workers are reporting hours in a fair manner. He told me "We trust our workers", and I did not like his reply.

This is how I worked as a contractor, and I still do:

  1. Open an account at some large freelancing site as an employer. Open another account as a freelancer. Create an hourly job as an employer and invite your other self. Set some minumum price, like 0.01 per hour. Download an hourly tool and start reporting hours via desktop snapshots. Give the client access to your employer account (employers cannot delete snapshots), so that he can review snapshots. As I can recall, oDesk allows this way of work officially where you create your contractor and your agency and then accept yourself for some work. They refer to this as self-tracking. In the next project you may propose him to skip this part since you've proven yourself. If he refuses, don't be angry if he's a good client. Try to understand him.

  2. Open a free SVN account and give client access to it. If he's paying you weekly, then you commit changes on Friday. Or the same day he pays you. Assure him that by having your sources, he can cancel the project any time safely (you don't want him to do this, but this will make them feel safe).

These two things made my toughest clients feel safe.

As an extra, you can open some project management account on some service and record work hours there as well.

The bottom line is, it's not easy to pay someone hourly without having insight in his work. The remote types of works made clients being overly cautious (not without reason, IMHO), and you have to make the feel comfortable. At some point, they will stop asking you to monitor your work.

Also do not think the client is a bad one if he's asking that. He must have been burned in the past.

1

When I start a new development project, I'm usually tasked with developing a functional spec. It generally takes me a couple of weeks of working onsite, interviewing the manager and project members to learn the system's capabilities & limitations, and their requirements & expectations. During that time I might write a draft or two and critique it with the manager. Eventually I tell the manager I'm going to spend the next day at my own office (at home, but I refer to it in work terms - don't convey an image of bathrobe and slippers!) writing up a spec for us to review. I make a specific appointment with him/her to review it on the subsequent day. Then I do what I said I would do, appear on time with a review-worthy piece in hand, and prepared to discuss it.

I've never been questioned after that point about where I work or how much time I bill for it.

Edit: As others have said, if the client really needs convincing that I'm honest, then I'll need convincing they'll continue to pay me in full and on time.

I trust my clients until I have a reason not to, and I choose to work with clients who can work from a similar assumption. Otherwise there is too much distraction from the ostensible reason we're working together - to provide a service they want and believe I can deliver - for the relationship to be a productive one.

0

When I'm billing hourly, I build my monthly invoice on a spreadheet. Column A is start time. B is end time. C is a desription of what I did during the period, including maybe a statement about what I'm going to do next. Column D = B - A. Column E = D * my rate.

I send all this detail as my invoice with appropriate (pretty) header and footer, payment instructions, etc.

Long story short, I bill to the minute and provide details about the content of every phone conference, programming period, etc.

BTW, in Excel records date and time. And Column D needs formatting to display hh:mm.

  • Welcome Jerry... whilst this answers the question "How do you raise an invoice" it doesn't really answer the question being asked. – Andrew Sep 2 '13 at 8:39
  • PS: Not my down-vote – Andrew Sep 3 '13 at 20:38

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