Question
I have an increasing number of clients for my business consultancy (focused on nonprofit fundraising). As much as I was hoping to develop some economies of scale by securing several clients with the same needs, they all seem to be very different ... and require varying degrees of hours, energy, investment, etc
I am struggling with how to best structure my billing in a way that is most appealing to prospects and also the most profitable (and easiest to manage) for me. I have a somewhat visceral reaction to the idea of tracking hours and billing based on time ... my natural inclination is to bill by the project. But this has bitten me in the backside a few times due to scope creep (and my natural tendency to take on too much, as if I were an interim staff member).
I recently met a consultant who bills by the week; she focuses full-time on one client's project for a week at a time and bills them accordingly. This sounded appealing, but is untenable for me since I have multiple conflicts (i.e. I teach at a local high school three days per week and also have some standing meetings for other clients, so I can't dedicate a full-time schedule to any client). But I've been wondering if I could bill by the week and just tell the client it's a batch of about 4-5 hours per day?
What have you seen to be a good model?Bidding based on projects (my current approach)? Daily or weekly rates?
Or should I just grow up and bill by the hour -- and if so, how do you keep the client from feeling afraid of the running clock (or feeling nickel-and-dimed for every time they email or call you)?
Answer
Billing for business consulting can be challenging, especially when working with clients that have different needs and varying degrees of hours, energy, and investment. Here are a few billing models that you may find helpful:
Project-based billing: This model is based on delivering a specific project or outcome to the client. This can be a good option if you have a clear understanding of the scope of the project and the client's goals. However, it can be difficult to manage scope creep and ensure that the client feels that they are getting value for their money.
Retainer-based billing: This model involves charging a monthly or quarterly fee for ongoing support and advice. This can be a good option if you are working with a client for an extended period of time, and it can help you manage scope creep and ensure that the client feels that they are getting value for their money.
Value-based billing: This model involves charging for the value that you bring to the client, rather than the hours you work. This can be a good option if you are working with a client that has a specific goal in mind and you can clearly demonstrate the value that you will bring to the client.
Hourly billing: This model involves billing the client for the hours you work on their project. This can be a good option if you have a clear understanding of the scope of the project and the client's goals, but it can be difficult to manage scope creep and ensure that the client feels that they are getting value for their money.
In my opinion, the best model for you would be a combination of project-based and value-based billing. This way you can set a clear scope and deliverables with a defined timeline while also charging based on the value you bring to the client.
In order to keep the client from feeling afraid of the running clock, it is important to be transparent with them about the scope of the project and the deliverables you will be providing. Also, you can provide regular updates and reports that show the progress of the project and how it aligns with the client's goals. Additionally, you can set clear communication guidelines and limits to keep clients from feeling nickel-and-dimed for every time they email or call you.
