We offer a very wide variety of fee structures and billing arrangements to clients during the sales process. This is so that we can meet the client’s needs optimally and make their lives easy. For example, some clients need fixed costs for services, while others may be paying partially in company stock, or deferred fees. Some deals we make involve future payments contingent on the success of the project.
We are working to simplify our billing structures to help us operate more efficiently and with fewer opportunities to make mistakes with invoices. Please talk to Kurt and Nikki if you have suggestions.
The most common scenarios for One-Time projects are:
- Fixed cost, in phases. We create an estimate for the whole project and establish a fixed cost for the first phase. Then, for each subsequent phase, we agree on a fixed cost for just that phase prior to starting the phase.
- Hourly billing with floor and ceiling. We agree on an overall scope but don’t go too nuts to hone every single detail. We provide an estimate and charge hourly. We charge at least some % of the estimate, and at most some other multiple of it. For example, if our estimate is $100k, we might make the floor $80k and the ceiling $120k. This gives the client assurance that the budget will be within a certain amount, while providing the flexibility of an hourly arrangement.
Both fixed cost and hourly arrangements have upsides and downsides. We tend to prefer fixed cost when the scope of each phase of work can be reasonably grasped at the outset. Hourly arrangements offer the client the opportunity to control the final cost by making certain decisions during the process. When working hourly, it is important to contextualize the cost impact of any given choice the client is making. They should feel in control of where the final costs end up.
As of 2021 we have hourly clients on two different types of hourly rate structures:
- Blended Rate. This is a common rate for any work done.
- Rate Card. We provide a rate that varies based on the category of work performed. For instance, we might charge a different rate for project management as we do for development.
At the start of any project, you will create a Harvest project. The Harvest project must reflect accurately the billing arrangement we have with the client. In cases where we are working from an estimate, ensure that the estimate is entered into Harvest as the primary budget. If we have a fee floor or cap, make sure that is noted in the Harvest project notes.
As you go about your work, check your project budgets constantly. Once a day is great – basically, whenever you are trying to ascertain the status of a project, check the budget as well. When you do your weekly check-in with the client, if the project is hourly, you must update them on the status of the budget every week. If the project is fixed-rate, you don’t need to keep them in the loop since it doesn’t make a difference for them, but you should update the team internally every week so they understand where we are at.
Managing Foreign Currency
Harvest projects do not yet support multiple currencies, which sucks! If we do a project in Euro or CAD, the least confusing way is to enter the correct absolute amounts into Harvest, and then ensure that Nikki is aware of the currency to be invoiced. Harvest can invoice clients in their proper currency.
This means that when you see the budget report and statistics in Harvest, it will show simply with a dollar sign, but when the invoice goes out, it will be in the proper currency.
For example, if we are charging 200 euro/hr for a certain project, just enter $200 as the project rate. Don’t convert the rate to actual USD.