Renegotiating The Contract (And Other Tales Of Horror)

Advertisement

You’ve met with the client, done the creative brief and gotten some kind of written agreement or contract. Work has been creative and progressing nicely. The joy and hope for life slowly return as the scent of money looms. So, with an overdose of sleeping pills no longer your retirement plan, you start to delete your suicide note and dispose of the envelopes containing instructions on terminating your accounts on Twitter, Facebook and LinkedIn.

Then, someone crunches some numbers and realizes that you can’t be paid what was agreed on. Suddenly, your contract becomes either a weapon in a brutal fight or a token to keep the job going in the hope of some pay and a return client.

The Hard Part Is Behind You

Many people start an assignment only after a percentage of the job has been paid. 50% is nice, but convincing the big clients that they are not your bank is becoming harder and harder, and the promise of payment in 30 days does not give you a warm feeling inside.

I am currently awaiting word from a client who has to evaluate some concepts and inform me of which to invoice (per piece). I am now in my sixth week of waiting, and then I have to wait 30 days beyond that to receive payment. I’ll be paid faster than the waiting period for approval for a large corporation. If you have the deposit fee, walking away is an option, but if you don’t, then you’re in a tough spot.

For hourly jobs, I always include a summary in each email of my hours spent. Sometimes, they actually pay attention and step on the brakes so hard that you can hear the job screeching to a halt. I have never worked on a project that didn’t go around and around and rack up the hours. Clients rarely connect the hours spent on committee decisions to the many extra hours they eat up. When they do and the budget is dried up, who do they turn to to make the project fit the budget?

When this happens, the strongest contract is worthless if you’re trying to finish the project, educate the client and show them a better method of coming in under budget while getting exactly what they want. The alternative is a collection agency or small-claims court (check your local laws for limits on small claims and civil claims); I prefer collection agencies, but you still may never see the money.

My Story Of Horror Averted… For Now

This story involves a website for a mid-sized company. Because the boss’ son knew my wife, his cousin asked for the “family discount.” The discount wasn’t enough to sting, so I agreed on an hourly rate and began. I was to work with the boss’ secretary as my contact person. A couple of weeks rolled by, with changes and odd requests coming in. The requests were implemented, and more requests came in, sometimes reverting the project to a previous version. This went on for a while until I got a call from the boss one weekend. He was angry that I wasn’t following his directions and wanted to know what my problem was.

I sent him several emails showing the instructions for the changes. There was some silence on the phone before he muttered, “Oh… my… God.”

He said he’d get back to me and hung up. Monday afternoon he calls to relate a story that is unfortunately not entirely unfamiliar. His secretary, it seems, has always wanted to be an art director. She had no formal training but apparently loved the idea of having the power to hold meetings and tell designers what to do, because apparently that was her impression of what art directors did. That and drink a lot of gourmet coffee.

She ignored what the boss wanted so that she could run the project and present it to him as her “art direction.” When I told him that she had wracked up about $2,000 in changes, he hit the roof.

“You can’t expect me to pay that!?” he boomed.

“I did everything I was told to do by the point person you assigned to me,” I answered softly, hoping my tone would bring him down a little. I knew he was furious and wasn’t about to part with another $2,000 (family discount included).

“I can’t afford another $2,000 in the budget.”

“I can’t afford to walk away from $2,000 of work I did, forsaking other work, so the money can’t be replaced or forgotten.”

“You’re going to have to work with us on this,” said the client, a little more down to earth, but obviously worried I hadn’t given in right away and cut my bill.

“May I suggest you take it out of your secretary’s pay?” I gently suggested. “I’m sure she’s worried about losing her job right now, and she’d probably prefer to pay out of pocket than just be fired.”

“I’ll get back to you,” said the boss before hanging up. His tone indicated that he hadn’t decided whose head would roll.

After about a week, he called back and informed me that I would be working directly with him. He told me what he had asked for before the secretary (whose name he never brought up again) messed with his directions. We completed the whole thing in a week. I don’t know what ever happened internally. Later on, they called a couple of times to revise a page or two on the website, but eventually they stopped calling and later redid the website with someone else very cheaply — probably in cost and certainly in look.

I did get paid the entire amount, minus the family discount, and it led to more work. I never renegotiated, but I would have to save the client. My gamble may or may not have paid off because the relationship went on for a brief period, but I was prepared to renegotiate to keep this client with the “dysfunctional family discount.”

I’m Often Asked to Renegotiate

Sometimes renegotiating gives you a better deal. Sometimes you just have to take a lower fee and hope it leads to something better down the road. And sometimes you have to cut your losses, take some money and learn a lesson. I wish I knew what that lesson was. I think it’s to say, “Yes.”

A good client of mine, a huge corporate entity, assigned me the challenge of coming up with innovative initiatives. I could submit up to three, and each idea accepted would pay me enough to buy all the fast food lunches I wanted for the rest of the hour. I submitted three, but the point person felt that one of them wasn’t quite there and so would pay me a fifth of the agreed-upon slave wages. What kind of candy bar would I buy with that money?

“I could never, in good conscience, invoice you for something that you are not 100% happy with and will not invoice you for that initiative,” I wrote. “I must also state that this negates our contract for ownership on this piece only.”

He agreed and was obviously happy with the renegotiation because he has since sent me better-paying work, and I was happy to retain the rights to the initiative, which I shopped elsewhere.

What if he had insisted on paying less for ownership of the third idea? I would have given in. The client was too important, and all that would happen is my pride would be hurt and the client might have made a huge windfall from the idea and looked forward to cheating me again… well, you know what I mean. They would see my value, and obviously I’m willing to be “flexible.”

Being “flexible,” in my experience with work and life, means inconveniencing myself because someone else screwed up. I use different words, but never in mixed company.

In negotiating a contract with another client, the partners agreed that I should include “… and anything else we deem necessary.” (People who have heard this story love it.) Obviously, entering the slave creative trade wasn’t acceptable to me, and so they told me they needed to work with someone “more flexible.”

My guess is that either they never found someone to launch their business or some poor soul is owed many thousands of dollars.

What To Do When Asked For a “Flexibility” Mid-Project?

There are many schools of thought on what to do when you’re asked to be “flexible” with your work and invoice right in the middle of a project, ranging from quiet acceptance to violent government overthrow. Let’s explore the middle road.

When you’re asked out of the blue to reduce an invoice or provide extra unpaid work, the first thing you have to do is think. It’s okay to sit on your response overnight, depending on the deadline. If it comes via a phone call, then you can say to the client, “I understand your dilemma. I’ll need to crunch some numbers and come up with an option or two that will make us both happy and allow us to finish the project on time. Let me call you tomorrow with some great solutions.”

They may press for an answer right away. You’ll feel the pressure. Explain that a lot is at stake, and you want to be sure that everyone walks away from the renegotiation happy.

If they press further still, well then, think quickly and engage them in a negotiation. Here are some possible responses you can give:

— The first thought off the top of my head is to cut the number of changes by having one point person draw together the requests and decide what is necessary. That would cut the number of hours. Does that help you out?

— I can’t really reduce the invoice because it’s time that I can’t make up with other projects. What if I stretch out the payments over six months so that the overage falls into another budget period?

— I’ll give you a discounted rate on the next assignment to even it out.
[Wouldn't it be something to use that line on a client for a change?]

— If you can get me two dozen items of the product, I could easily agree to changing the monetary part of our agreement.

— You carry some products that we could use to barter.

— You have a service I could use, so let’s barter.

(Check your local laws on the value of bartered goods for taxation purposes, and always barter at the wholesale cost, not the retail cost.)

There are several ways to get paid while remaining “flexible.” When asked to renegotiate, think of what you want. Do you want the client to be a regular client? Do they give you enough work to even be regular? Has working with them been a positive experience? Is the fee structure good? What are you really giving up? Do you have another project waiting? Will a few unpaid hours dent your income from other clients? Is the client the type that would appreciate your sacrifice? Will you get referrals from this client? Does the 50% deposit cover your output so far, and could you just walk away now and leave them to find another freelancer?

Big Lies About Being “Flexible”

I became very close with many ad agency art buyers, and when they would get liquored up, I could easily get them to spill the industry lingo. They would laugh as they spat out slogans that had no meaning to anyone. I think back to the many times I heard those slogans thrown my way and how the laughs must have mounted at my expense as I left.

If you hear this:
“We’ll remember that you did us this favor…”

Insert the following:
“… and avoid you like the plague because of it.”

If you hear this:
“We ran over budget on this project, but you can add it to the next invoice…”

Insert the following:
“… which will never be happen because we’ll never run out of freelancers to screw.”

If you hear this:
“It will take you 10 minutes to do this…”

Insert the following:
“… But it will take you six weeks to listen to me say ‘I’ll know it when I see it’ and to listen to all my stories about my vacation to Fiji and my new Maserati.”

If you hear this:
“I just don’t understand how a design for one simple movie poster could cost more than $500?…”

Insert the following:
“… After all, it’ll only be used for the worldwide rights to all merchandise for this blockbuster film, and we expect the poster image will bring in only $485 million.”

(It’s long been the practice that illustrators, photographers and designers would charge more for work that would be licensed out. Licensing rights are just as important as the money earned from time spent on the actual work. The story of the Nike logo1 shows a happier ending.)

If you hear this:
“Oops! I typed $500 instead of $5,000 on my budget report. Could you give me a break here?…”

Insert the following:
“… so that I’m not fired when you show the contract to my boss.”

If you hear this:
“The client loves your work and wants to use you for further projects, but could you lower your fee as a kind of test?…”

Insert the following:
“… which you will fail, even if the work is great. Ha-ha! Satan wins again!”

It seems Satan has quite a following in advertising. As if we didn’t know that. How do you think agencies get work for the Super Bowl?

People will tell you all kinds of things to get what they want. We do it, too. The key is to know when to keep one’s mouth shut and when to negotiate one’s way to a happy solution, with as little of Satan’s influence as possible. You may not be cowering from him in subservient terror, but you’re stuck next to him on a cramped bus for the entire ride.

Related Posts

You may be interested in the following related posts:

(al)

Footnotes

  1. 1 http://www.dinesh.com/history_of_logos/miscellaneous_logos_-_design_and_history/nike_logo_-_design_and_history.html
  2. 2 http://www.smashingmagazine.com/2010/06/07/how-to-spot-a-sketchy-client-plus-a-contract-template/
  3. 3 http://www.smashingmagazine.com/2010/03/02/web-design-criticism-a-how-to/
  4. 4 http://www.smashingmagazine.com/2010/06/29/why-design-by-commitee-should-die/
  5. 5 http://www.smashingmagazine.com/2010/04/09/dealing-with-clients-who-refuse-to-pay/
  6. 6 http://polldaddy.com/poll/3444753/
  7. 7 http://polldaddy.com/features-surveys/

↑ Back to topShare on Twitter

Speider Schneider is a former member of The Usual Gang of Idiots at MAD Magazine, “among other professional embarrassments and failures.” He currently writes for local newspapers, blogs and other web content and has designed products for Disney/Pixar, Warner Bros., Harley-Davidson, ESPN, Mattel, DC and Marvel Comics, Cartoon Network and Nickelodeon among other notable companies. Speider is a former member of the board for the Graphic Artists Guild, co-chair of the GAG Professional Practices Committee and a former board member of the Society of Illustrators. He also continues to speak at art schools across the United States on business and professional practices and telling frightening stories that make students question their career choice (just kidding).

Advertising
  1. 1

    Tevi Hirschhorn

    July 8, 2010 6:29 am

    haha – too true!

    Renegotiating is a tricky business. I don’t give up final files until I’ve been paid, nor do I transfer rights ownership until I’ve been paid. It’s in the contract, and I remind the client that. I only renegotiate if I really, really believe I’ll get more business further down the road. Generally, not with new clients.

    0
  2. 2

    your horror story with the family discount sounds very familiar…
    Just got a similar experience here in italy… at the end the nephew of the real boss who assumed command over the website/advertisement got fired…and i’m still with them.

    I kept myself out of the firing range (so to speak) my having a back up of all the emails i got from him…
    Altough I don’t have to do any ads (for in print) anymore… i got some bigger web projects now in return.

    0
  3. 3

    That’s an excellent read, thanks Speider Schneider and thanks Smashing for involving such a great author. As a freelancer I find much value in this article. It opens my eyes on situations when I screwed up dealing with clients and gives some practical advice, too. And I just love the humor the author puts in his writing!

    0
    • 4

      Thank you very much! I appreciate the kind words and support. There are some other articles I’ve done for Smashing that might help (click on the author link to go to a list of the other stories) and there are more in the queue, awaiting publication. I’m sure you have a few, too!
      ;)

      0
  4. 5

    This is a great article, i always run into clients that want more for way less even though they got the big bucks for the project.

    0
  5. 6

    Great article, I did love the “Satan wins again!” slogan :).
    That happens allot, people want things for free, no matter what, hopefully not every client is that way.

    0
    • 7

      If every client was like this then the industry would fall apart. It happens from time to time, usually because the client literally ignores the hours as the project goes along and then adds up the fees and realizes there’s no budget to finish or is just a cheat and thinks the midway scare will lower the fee. The latter, as people have posted, can be negotiated right down to the wire where you refuse to deliver or transfer the copyright unless payment is rendered. Do you take half the fee and chalk it up to experience? Sometimes when full payment looks bleak. Does walking out at the last minute, refusing to deliver work? Clients scream they are being blackmailed but it often works because they are as stuck between a rock and a hard place. I have literally stood there and not released my grip on files until the check was in my hand, followed by a trail of insults and threats from the client as I walk off into the sunset. What have I lost? A bothersome client who doesn’t want to pay.

      Thanks for reading and posting your thoughts!

      0
  6. 8

    Renegotiating can be art in itself. The worst is when you finally reach a point that you both agree at, and then the client runs the other way.

    0
  7. 12

    #1. Never deal with secretaries, wives or the boss’ kids/nephews.

    #2. When I switched from hourly to a ‘product / flat rate’ — clients were WAY more comfortable.

    #3. Make revision / ‘customization’ charges HURT like heck.

    0
    • 13

      Ted-
      High five!

      0
      • 14

        no.
        dont do that.

        Dont make it ‘hurt like heck’.

        Make it be a reasonable cost based on your time, effort and materials and also ensure that the client knows that this little detour away from their spec is costing them, both in terms of ultimate deliverable/milestone compliance, but also in terms of -is this new direction really helping us achieve or goals? will it equate to more sales?

        “Making revisions ‘hurt like heck’ ” seems petulant and mean

        0
        • 15

          There comes a time for mean. Petulant, should be left out. Professional and courteous, even in the worst of situations is always the high road. Although I’m dipping into another article, I will divulge an often heard saying when I speak to young professionals (and we more experienced ones need to hear it often, too!), “be nice to the people you meet on the way up the professional ladder because you will meet them on the way down.”

          You never know who may be sitting at that committee table who will move on elsewhere and either recommend you or warn against you. Word of mouth is the original viral video.

          I am always receiving calls from people who may have been a lower level marketing person who went on to bigger and better, remember my talent and my professional behavior, even when the project blows up (and they think I’m hilarious).

          One marketing person who brought me onto a job that imploded, thanks to the editor of a well-known NYC publication, was so horrified by how I was treated and how well I carried myself through some really abusive behavior, she offered me a chance for some “horizontal hunka-chunka.” She backed out later, so I guess I just got screwed by her boss. One would have cancelled out the other.

          Just keep in mind that people watch you and while a client may laugh behind your back at how he/she screwed you, those around the boss will empathize with you because he/she does it to them everyday. It’s hidden allies. Show professional demeanor, gain trust, grow a relationship and you will find life so much easier.

          0
  8. 16

    GREAT article. Really engaging read… thanks!

    0
  9. 17

    Excellent article, thanks

    0
  10. 18

    Really funny and engaging. Now I know at least I’m not the only person that gets ripped off by clients. Thanks!!!!

    0
  11. 20

    These types of articles are every bit as important as technical advice. In the (hopefully) near future, I will be the business manager/bouncer for a very talented but meek Web developer. Knowing in advance what pitfalls and tricks to be looking out for will make a real difference.

    0
    • 21

      The meek shall inherit the Earth but the tough negotiators will strip it clean first.

      0
  12. 22

    Great Article…

    0
  13. 23

    I love horror stories. But one day… it could be you. Always get 40% up-front, 50% if you’re bold enough to ask. Even better, agree in advance to three or four specific milestones for payment.

    0
  14. 24

    It seems I have a long way to go… But still I have already experience some of the horror above! Gees It’s so scary dealing with future clients…

    0
    • 25

      Noelj, it is a delicate dance of business and creatives are usually not trained to deal with the business side of the industry. Never beat yourself up if you feel you’ve been cheated — learn a lesson. The only reason I am able to write these articles is that I have been through this all many, many times. Each time I get stronger and learn how to best deal with it.

      I few months ago a neighbor, who was becoming friendly with me, asked me to design his new company logo. I spoke to him about logos and branding and he didn’t want “any branding.” There was the usual request for a discount and the neighborly trust of no contract. Sure enough, it fell apart, I got paid a fourth of what I had already rolled up in charges and I was pissed at a neighbor.

      The good side is that I did have enough emails with terms and such (worded in a careful manner to introduce rights without scaring the client) so I could have gone to small claims court and been awarded the rest (*note: winning an award in small claims court is just an order to pay but it doesn’t mean you WILL get paid) and the neighbor, who had shown himself to be a sloppy alcoholic, was off my back and I never had to deal with him again. Well worth the lost fees!

      0
  15. 26

    Great article. I’ve written posts on this myself and the warning signs to watch out for. Some clients are only trying to see what they can get away with. Experience on how to spot potentially horrible clients comes with experience.

    Thanks for sharing

    0
  16. 27

    I’m sure it was a great article but I kinda got bored. Its almost impossible to just sit and read that whole thing. It needs to be broken up a bit.

    I may just be having a bad day though, not sure :)

    0
    • 28

      Read part and come back later for the rest. It can also be depressing to read about things that happen to us, while we sit in the comfort zone in front of our computer.

      0
  17. 29

    great article, really really true facts!

    0
  18. 31

    I am having issues with a client that wanted the moon and stars on a shoestring budget. I completed the project in January and stretched the payments over a year. $2 million in business last year and they can’t pay me $6000.

    Anyway, I completed their product and launched it with a small down payment. I got paid January-March, but in April, the check bounced. The owner’s wife (who is extremely passive aggressive) became my point of contact because the owner didn’t want to deal with it.

    She gave me this sob story about how they were hurting for business, and needed a break. I explained that they were the first client I had ever extended payments for and that was a considerable break in my opinion. She got all bitchy and said that they just couldn’t pay me.

    So, at this point, I’ve been paid around $1700 for a $6000 contract, with no prospects of getting paid. Part of the contract was that I would design an e-mail a month for them to send to around 100 people using Mailchimp. On Tuesday, I received an e-mail from the client’s wife saying that they needed an e-mail designed for a promotion that started today.

    I informed her that 1. That just could not be done in such a short period of time (I know it can, but I was trying to be nice) and 2. They are about four months behind. In her passive-aggressive nature, she threatens to sue me for breach of contract.

    0
    • 32

      I understand and it’s a fork in the road…and either way you get forked! Take the current path and you won’t get paid or see further work. Seems like you want to keep walking that path. Let me try to imagine the path or the unknown; you explain you can do it and hope the rift can be repaired. Say you understand that times are tough and you are in the same boat. Could they pay half the regular payments and give you a check when you deliver the card? Sounds like you may be past that and merely writing that made me throw up in my mouth a little. But it doesn’t cost a thing except pride and a little lunch to ask.

      You have a contract but what terms are quoted for transfer of rights, payments and is there an escape clause? That is rare but I’m thinking of putting it into my contract in no uncertain terms. When it comes down to it, do you need to go to court to enforce the recognition of the terms and breach thereof or give the client one last chance and send it to collections if they balk?

      I’m guessing the path to conflict is the one you must travel. You’ll have lots of company.

      0
  19. 33

    I love it! and seriously considering printing out the list of on-the-spot renegotiations and putting it right by my computer incase I get the call..

    0
  20. 34

    “If you have the deposit fee, walking away is an option, but if you don’t then you’re in a tough spot.” What does that tell us? Never, EVER begin work without 50% down. Write it into the contract. Also write in the payment schedule and if possible make 25% due at midpoint and the last 25% due at the end. As one commenter here said, write into the contract that the client does not get rights to the work or final files until payment is made in full. Thirty days is a jail term, by the way—not a valid excuse for paying late.

    If a prospective client balks at paying up front and presses the point, we are free to remind him that we must pay many of our expenses ahead of time, not the least of which are our monthly rent/lease and all insurance premiums.

    When asked for a discount, don’t give a price break. Instead, offer an extra service at no charge (“Charging less wouldn’t be fair to my other clients, but here’s what I can do for friends and family…”). And then explain the extra service, being sure to add “Normally I charge $200 for that.” If you can’t bring yourself to charge full price, then do it for free and nail down the terms to your liking. No kidding.

    The bottom line is, if we expect to be treated as professionals, we must act like professionals. That means a detailed contract and a businesslike approach when discussing the money. No hemming and hawing. The attitude must come through: This is what I charge because I ‘m worth it.

    0
    • 35

      I LOVE “Thirty days is a jail term, by the way—not a valid excuse for paying late!” Thanks for sharing that and I’m sure readers will be adding that to their objection responses as well. With the hits these articles get, it should be in Wikipedia in seventeen hours. ;)

      Everything you say is true. I always, always insist people have a strong contract with those points (please read my article “How to Spot Sketchy Clients (Plus Contract Template)” if you have no contract to use). But, what happens when the client says, “no!” to the terms half way through? How much is the possible payoff? What will it cost you to enforce a contract?

      It is, as I always say, a delicate dance and sometimes a dance partner stumbles. The other partner has to pick them up off the floor…or just put the mercy bullet into their head.

      0
  21. 36

    Moksha Solutions

    July 8, 2010 12:52 pm

    its nice to know what client sometime can do to you, much of the time for me its project wise payment, no hour payment :o(

    0
    • 37

      Even by project fees, it can still go awry. Always keep an open mind when horror strikes!

      0
  22. 38

    Among all the trite useless jargon that’s published here, this is among my favorite reads from Smashing Magazine in a looooooooong time. Unique, funny, practical, and has happened to all of us. Thank you very much Speider and keep writing for Smashing Magazine. Hopefully your articles can make this website a bit more interesting otherwise I fear Smashing Mag. is the next SitePoint. :)

    0
  23. 39

    I’m a lawyer and this is painful to read. If you do outstanding work and are in high demand, then you can be like Paul Rand. Here’s Steve Jobs’ encounter with him:

    Jobs says: I asked him if he would come up with a few options. And he said, “No. I will solve your problem for you. And you will pay me. And you don’t have to use the solution. If you want options, go talk to other people. But I’ll solve your problem for you the best way I know how. And you use it or not. That’s up to you. You’re the client. But you pay me.” And there was a clarity about the relationship that was refreshing.

    Here’s a link to the interview with Steve Jobs: http://kottke.org/10/04/1993-steve-jobs-inverview-about-paul-rand

    Another way to tackle this is to get a retainer up front that must be replenished once its half way depleted. It sounds aggressive, but it also displays a professionalism for your work. Like I said, if you’re good enough the client will jump through your hoops rather than you jumping through their hoops.

    0
    • 40

      There’s only one Paul Rand and you should hear what he does when a client decides not to pay! It happens all the time and as a lawyer you can shed some light on contracts and small claims court (and the ensuing battle with liens) for the Smashing readers. Please comment on those subjects and many people will benefit from that knowledge.

      Thanks!

      0
  24. 41

    @Happy Reader, I appreciate that. I think having a poll on my article says the Smashing Staff is wondering why my articles on professional practices get so many hits, comments and “likes.” Personally I don’t know why, thank you Satan!

    I think there’s a great balance here and I’ve been a reader long before I ever submitted my first proofreader nightmare of a story. If anyone can find something of value here, then it has enriched a career and that’s what it’s all about.

    Still, having your encouraging words for my work will surely spawn many other articles. Thanks for reading and responding. There are other articles on professional practices on my profile (click my name at the top) as well as other blogs and threatening letters.
    ;)

    0
  25. 42

    Tip:

    If the client wants “…and anything else we deem necessary” in the contract, put in that you need to be paid on a monthly basis, not at the end on the contact. This way, if they want to own you for the rest of time, they have to pay for it.

    0
    • 43

      I had one like that except they just kept making changes, thought they were done and paid me. The they would notice they had given me the wrong name (yes, a client forgot their own name and nobody noticed it until it was on press), and another fee came in. It was a great two week project that took two months.

      Great tip. Thanks!

      0
  26. 44

    I can’t remember the last time I finished reading a whole post. Great article. Thank you speider!

    0
  27. 45

    Thank you! I just can’t write a paragraph that’s under 1,500 words.

    0
  28. 46

    That’s a great read and should make everyone think about how they handle this stuff.

    For myself, I’ve learned that hosting my clients’ websites is an admin pain but gives me a wonderful power in delicate situations. I’ve never had to turn a non-paying client site off, but I have used the fact that I can to influence negotiations. Nicely, of course.

    It’s about the only ‘big stick’ I have when I ‘speak softly’.

    0
  29. 47

    Angus Fretwell

    July 8, 2010 5:24 pm

    I really loved the format of this article with the examples, etc. Great work, and a good read. Thanks!

    0
  30. 48

    Nischal Tiwari

    July 8, 2010 8:32 pm

    I am Freelance UI Designer from Nepal. Once of my client captivate design(http://www.captivatedesigns.com/) assigned me daily design works and agreed to pay every end of the month. I worked on every project seriously and deliver for them. But as the days went , i found they were giving me so much of pressure, So, i decided to work just for that month and told them about it.. Now its been several month now.. still they haven’t paid me a single penny. What should i do now ? Neither they reply my email, nor they talk with me in the IMs.

    0
    • 49

      I don’t know Nepalese law but if it’s based on English Common Law, and the invoice and contract are sound, then there must be collection agencies to use. Send a registered letter or message with a return receipt, to show delivery, and calmly and professionally inform them you will be sending the amount for collection in 15 days and if payment is not received in that time, then they can deal with a collection agency.

      Dealing with collection agencies is a pain and it can put a negative flag on a business’ account and ability to get credit with suppliers for every day items an office needs. If they contest the invoice, you will end up in court to prove it is legitimate and needs to be paid. Collecting from a judgement involves a lot more work than a collection agency.

      Many contracts stipulate that rights are not transferred until payment is received in full. If you really want to play hardball, tell them they are in violation of the copyright law (again, check your local laws) and tell them you will NOT sell them the rights and they must remove the material within 5 days. You may not get paid and they probably won’t remove it, but it may start you talking and that’s a big step.

      Also, never mention a clients name in any context. Aside from any non-disclosure you may have signed, it could be libelous and as deserved as it might be, it’s not considered good form. Future clients might be afraid you would do the same to them.

      Good luck.

      0
    • 50

      That one month of free work is the price of your education in dealing with bad customers.

      Next time don’t tell such a client that you’re quitting until you get paid. The other thing is that you should get paid for every delivery. If not, you risk working for free again.

      0
  31. 51

    Helge-Kristoffer Wang

    July 8, 2010 10:14 pm

    Word. Nothing more to say!

    0
  32. 52

    Good Tips and Tricks…
    Will help us on our further communication and dealing with clients:)

    0
  33. 53

    yeah.. it`s true, it`s cruel.. people are cruel. In our country (Slovakia) 90% of customers are like this. Even contracts are not helping. It`s all about fighting, knowing people and negotiating. But there must be a way how to change them.

    0
    • 54

      Milan, you and your peers either need a central set of rules, understood by all Slovakian creatives. A union of sorts. When all creatives can state the same terms and prices, then clients can push only so far. My fear is there will always be those who undercut the competition.

      My only suggestion is to create a “fastfood” studio with set price packages and payments upfront and upon delivery. There are more of these popping up. Sometimes people understand buying something at a store or on line but creative work is still a mystery to them. With a logo or template factory, customers will pick and choose elements and it seems to be fine for those who are bargain shopping and really don’t care about branding or quality. If you can offer great work for a set price, then you might do very well. It’s hard to suggest this, but being flexible to the culture of your client is the utmost to keep doing business.

      If the cost of living is low where you are, sites like elance might give you quantity but not quality payments.

      Good luck.

      0
  34. 55

    This article is so useful. Also some of the replies should be added to the article itself.

    Great read, thanks.

    0
    • 56

      Thanks, Adrian. One of the things I enjoy about these articles is writing them as to invite comments and opinions. In large part, the comments make the article. It’s interactive!

      0
  35. 57

    Raphael Pudlowski

    July 9, 2010 12:25 am

    another nice article Speider :)
    I think the problem is that now there is more and more clients like this…
    Finding a nice one, with a reasonable fee and a good teamwork designer / client, is becoming harder and harder.
    Kids downloading Adobe CS package and selling “designs” for a ridiculous fee don’t help either…

    0
    • 58

      Thanks! I believe the next story in the queue for publishing is entitled, “Are We Our Own Worst Enemy?” and it discusses that very problem.

      0
  36. 59

    oh ho!!! very nice topic….

    i ever face this type of condition… i was thinking this happen only with me…so funny. i am happy to know all of this.

    0
  37. 60

    Great article! You can never let your guards down. I had an experience where a referral needed to design a website in time for the major campaign, but before we began, they needed a great looking “under construction” page. Since this page was a last minute add on, we’d decided to include it at no charge. 50% deposit check was lost in the mail. Turned out that was all they needed, and after dragging the actual project passed the campaign lunch, they stopped all communication. I could have enforced the contract, but why waste time – lesson learned.

    0
  38. 61

    “I am currently awaiting word from a client who has to evaluate some concepts and inform me of which to invoice (per piece). I am now in my sixth week of waiting, and then I have to wait 30 days beyond that to receive payment”
    - Haven been bitten by the bug before, NEVER AGAIN!

    Probably the BIGGEST WEASEL OUT LOOPHOLE IN ANY CONTRACT, *NON SPECIFICATION OF APPROVAL GUIDELINES!!*

    For all your x % down and milestone clauses , if you submit something, but have not specified exactly how long they have to ‘approve’ submitted work, then you can be completely and 100% screwed, trapped in a noxious purgatory w/o money, and w/o freedom to move.

    Ended up suing one such client, and as was their way, they waited almost the full 30 days before they even tried to send a response to the court. Unfortunately (for them) they had a rash of website related problems which popped up (totally out of the blue and unrelated, I swear) which momentarily swamped them and they missed a filing deadline, allowing me to win the case by default.
    I have now collected 2/3 of the outstanding remainder, and am settling with them for the last 1/3 (about 3k) by having them produce a glowing recommendation letter and sign a non disclose/non disparagement agreement (Kinda like what’s in Tiger Wood’s Prenup/Postnup)

    0
  39. 62

    Yes, Steve, it’s a bad situation and from a very large, international corporation at that! But, as with your story on your client, we must be flexible to survive in these hard times. Your negotiations created a situation both parties will be happy with (although I’m sure the money would have been better) and the time you would spend pursuing the company for the final 3rd payment would be more trouble than it’s worth. Unfortunately, it sounds like there is no ongoing relationship.

    We learn our lessons and move on. An evolution of our business ability, so to speak.

    Thanks for sharing your story!

    0
    • 63

      Love the Christmas Tree Shop for the unexpected finds. I found some very cute nthigs there this evening all related to party planning. Yours finally opened?

      -1
  40. 64

    Haha, I had a client like this today!! Ugh,.

    0
  41. 65

    Amber Weinberg

    July 9, 2010 4:29 pm

    This is why I NEVER take on a client who asks for a discount. If they ask for one, I send them to someone else. They’re always the type of people to ask for the lambo while paying for a pinto

    0
    • 66

      Ah, but if you send them to someone else, they know they can get it cheaper. When I get a blind contact from a discount-freebie client, I will listen to what they want and make a reasonable offer. If they ask for a referral to someone “cheaper,” I tell them I know of only one person but he went insane and stabbed out a client’s eyes during a committee meeting. For some reason I never hear from them again. I wonder if they look for someone cheaper after that story?

      0
  42. 67

    Great article!

    I am nowhere near to you with experience and/or portfolio (and I am sure most of people that read this only dream of clients like Pixar or Disney). Furthermore, I am not even a designer, but a freelance enthusiast web developer who does development upon previously set design. On the other hand, there is a lots of webdesigners that do development, so here are my two cents from my short experience:

    Always set the firm terms in the contract for work that has to be done. Pay great attention to work and hours breakdown, whether you charge them by product or by work hours. It is very useful to list hours and amount of work needed in both offer and the contract – what are you going to deliver, and how long it takes you to do it. I.e., count approximate number of pages you need to output and translate that into the work hours. If you need 40 hrs to finish up the initial web skeleton, make sure they understand that 40 hrs does NOT translate into a one weeks work, but rather that it takes you two to four weeks to finish that part. Leave room for yourself, and respect deadlines you are setting.

    Also, count all the forms, frontend or backend functionalities, and similar, and define them in advance (event calendar, if not well defined previously, can eat up all of the hours you will be charging, even if you are nowhere near the finish). Once you have broken down the work that needs to be done into the logical phases, it is much easier for the client to understand how much work you need to do, what is it, how is it built, etc. Once you have such breakdown of work, you can also adjust your downpayment requirements to reflect the work – e.g. once website skeleton is up, you can ask for half the money, and as you add details you can send respective successive invoices, e.g. another quarter of money for completing all the forms, and last payment once you fixed all the glitches or finished all the last touches and re-touches.

    Also, it is a good practice to inform the client in advance what would be additional details that could be added on later, and what would be approximate cost, e.g. adding advertisement box for google ads would be cheap, but adding complete ad manager would probably cost you more in your own time. Make sure that client understands that too.

    Last but not the least, make sure your copyright is included into the contract. I have made all those mistakes in the past. I was working for the marketing house that wanted to launch new web portal, we broke down the work into three phases. Client wanted to have a bastard of the twitter/facebook/yahoo news/google portal, and all of that for really low sum. Luckily, we agreed on the first phase only. I discounted them big in the start, because I was really counting on my name/weblink being displayed at the bottom, which would help me get much more work later on. Unfortunately for me, client didn’t want to hear for such thing, he lives off the marketing and did not want to promote me as their developer. I ended up doing the first phase, as contracted, for really lot less than I would charge because of my mistake. Once I finished first phase, I was really not satisfied with prospective payments versus work I did and was supposed to do in the future, but we only signed contract for the first phase and it defined quite well what was I supposed to deliver. We went onto the second phase without signing second contract, since they were “in a hurry”, but it turned out to be a fiasco – them pressuring me for time and delivery like I was their employee and not a freelancer with other projects too (and without life), soon after that they became abusive over the phone, which all in all lead to the breach of our cooperation. Later on they found another developer which was, I guess, better suited for them in terms of pay and delivery.

    Pfuf, this turned out to be an article by itself, sorry for such a long comment, I was laying off a burden off of my chest. I have learned the hard way what I want to emphasize – that the well written initial offer, and good contract, are half the work done.

    Good luck to you all in the future, and once again, thanks for the great article.

    0
    • 68

      That’s why I write these articles and Smashing publishes them! They draw out the poison of the problem and sprout some great ideas in the comments.

      Thanks for the thoughtful post!

      0
  43. 69

    I’m always on the lookout for the client who wants “too much for too little, too soon”. An immediate red flag goes up and I make a decision about whether to work with them. Generally in these circumstances I just double what I usually charge. If they go away fine, if they come back fine – I’m covered for what may go wrong.

    Regarding contracts: I’ll make sure that I’ve nailed down function and design and and it all goes into a contract or an invoice. After that any changes to original spec must be approved via a ‘change order’ – I’ll send out a new estimate using Freshbooks and the client has to approve it online.

    Designing while building: I work with several design/branding/ad agencies and one of the dangers of doing so is that they sit between me and the client (that can be an advantage too). Therefore I make sure they (and the client) understand that their will be no designing while we’re building – that the design process is over. If they subsequently decide that changes need to be made then all work stops until change orders are approved by the client and not by the designer.

    None of this has to be complicated and since I’ve been down this road so many times its now basically instinctive.

    There will always be difficult client and difficult projects. The key is to catch problems early. It’s easy just to give in to small requests/deviations by the client but over time the project may die by a thousand cuts. So stop the client in her/his tracks and cover yourself contractually for these kinds of changes – even if it is just an invoice/estimate (Freshbooks is great for these kinds of documents).

    0
    • 70

      YES! Absolutely perfect and exactly what I preach to all creatives, knowing there are paths others choose, which is why options and comments on this thread are so important. Thank you for spelling this out for everyone. Awaiting approvals to proceed is key. The client wil plead to proceed in a timely manner and one must only remind them that it can…as soon as they approve the changes, charges, contract, what-have-you. If you have a deposit up front, the pressure is on the client to act quickly in a professional and business-like manner and keep their end of the bargain. What an insult to the client!

      I didn’t want to get into office software until a future article but I’m sure there are 300,000 articles out there already. Freshbooks is good, as are several other applications. Another great app needed by all freelancers and used in most design firms, is a time tracker.

      Think of software as that assistant or staff you can’t afford.

      0
  44. 71

    This story is direct hit… I have experienced a lot of the above mentioned situation!

    0
  45. 72

    Giving a running total of hours spent with every client correspondence is a great idea. It might help me honest to myself so I don’t shoot myself in the foot when always trying to be a nice guy!

    0
    • 73

      Tai, think of how hourly professionals like lawyers, plumbers or prostitutes charge. Talking on the phone and meetings is charged. Sometimes travel time to their office is charged (and mileage fees!). Why should the freelancer absorb any of these time expenses? People who get lazy with minutes lose hours. I got that from a fortune cookie but it’s true…and delicious. If you talk for 15 minutes, do you charge by the half hour? Lawyers put you in time blocks of 20 minutes. Talk for three minutes? Pay for twenty minutes. Always round UP!

      At the top of each correspondence, use the contact name, company, order or invoice number, credit/debit totals as of that date and hours as of that writing. Bold it and make the hours and debit/credit a couple of points larger than the aforementioned information.

      When it comes to the final tally of hours there will be clients who just say, “I never saw it!”

      0
  46. 74

    Anonimous Spaniard

    July 11, 2010 8:54 am

    First of all, sorry for my english.

    (Spanish situation on IT freelancing. Art freelancing is worse)

    Here in Spain it is very common to pay 90 or 180 days after the deriverables.

    The rest of conditions varies if you work for final clients or for IT companies. Most of IT companies are colloquially called “meat sellers”. They sell programmers by “cow headcounting”. By other side, final clients are land of “nephew art”, and you will have to report to someone’s nephew.

    You will will have to choose which one beast prefer to ride.

    Get the 50% before contract is imposible for a freelancer.

    It is imposible to get anything before contrat to a IT company. They will change allways the specifications, and will renegociate points on monthly basis. We call here this “squeezing providers”. And it is very common, and well considered. Expect that they choose the cheapest, and you will finishinig making the double, and earning the half. If you can afford the squeez, there is plenty on work. But each new proyect they expect that your conditions were the “renegociated”, and they will renegociated more, till you exploit. When you exploit, another freelance will continue, and you will not earn the money for the part of the work done. You can expect geting less money by hour than the cleaning woman. Far less money. A cleaning woman for a house is 12€, and you can finish working for 6€ by an hour.

    The key: short term projects. And trying not to make more that one project by year with the same boss. They are happy with freelance rotation, and if you stand for the second or the third project on a year, or for a long project, they will think that there is money on the table, and this is not good for you. Repeating is OK, but keep time between project and project.

    Final clients: here the business was devastarted years ago. All the money was to building homes (here we call “el ladrillo”). Outside big cities, there is nearly no business outside “el ladrillo”.

    “El ladrillo” has impregnated all spanish economy with its “high ethics standars”. This means that, on the most of the clients, you can expect:

    * Be prepared to hard negociate at the begining. The key point is the first before payment. 30% is possible, but client will claim a lot (do not worry, quiet and pacefully negociation is for american films).

    * Be prepared to really hard negociate at the end. When the deliverable is given, the client will ask to free “posyaque”. (Free unmplanified and unpayed work, that can be more complex than the original project).

    * Be prepared to not to charge last payment. If the most of the project is due to be payed and the deiverables were given, your live will be a hell. Here in Spain payments for less than 3000€ can not be court reclamed, and justice is really slow (4 or more years), so you will have to have really deep pockets to use justicie (a clue: bank are considered “legally privileged debitors”; on bankruptcy they and taxes are first to get payed, so do not play with banks). I use charging at millestones, and don’t giving a fully working result till the last deriverable; so I have the upper hand on negociating “posyaques”.

    * Be prepared delays on payments.

    * Be prepared on changes and increments on specifications.

    * Be prepared for nephew art, nephew bosses, and leak of profesionalism.

    I prefer to work to final clients (any freelance that I known that worked for IT companies gone banckrupt), but It need for you to understand that the only money is that that is on your account, and signed contracts are useless, and there is not to be respected. Money by advance is the only thing that makes you confident. In my experience, if a client hesiates too much on paying by advace some money, he will not pay anything at all at the end.

    0
  47. 75

    Firstly, your English is better than mine and I suspect you speak other languages, too.

    I’ve heard horror stories about other countries and practices in freelance. While working at an iconic American publication, I was introduced to the work of an extremely talented illustrator from South America. His stories were equally horrid and he had the pleasure of making $50 for illustrating a magazine cover in his own country. When he started making $2,500 (USD) for covers of the magazine, he became a regular contributor and is apparently considered a “rich” man among his peers (who then flooded me with requests to do work for the magazine as well).

    His escape was to reach out to a country that paid well and had contracts, rights, etc. Naturally, his story is rare and he was able to work globally. IT work may not offer you the same opportunity.

    I knew an illustrator who got so sick of the lack of artist’s rights at the time, he dropped his career and became a lawyer and dedicated himself to fighting for artist’s rights. I’d say freelancers in Spain need to have their voices heard in the government to pass legislation protecting the rights of WORKERS and establish avenues for seeking payments, etc. You need to band together and find a government legislator who will fight for the cause. Beyond that, mankind has a nomadic past and probably future, moving where the work, food and women are most plentiful. You may have to consider a field where there is an ability to make a living.

    0
  48. 76

    This is a common problem we designers usually face. Clients expect a lot more than what they paid us for. I usually try to negotiate and discuss the project for several days to avoid any confusion and this really works well.

    0
  49. 77

    This is an awesome article. It’s “nice” to know that others have experienced this too. From my experience, a big part of whether you will get paid full price depends on if the buyer will immediately start making money from your efforts. If the answer is “no”, then they will try to bring down the price. From their point of view, why should they spend $5000 if there isn’t an immediate and measurable benefit of at least $5000 in present value of money. (e.g. If your work will most probably make them $200/month for the next 3 years or save them $150/month for 3 years, it will probably be worth it for them).

    This means that bootstrapped web businesses (no outside investors) will naturally try to bring you down to minimum wage or less. So will people who want a “brochure” site for their business but with no clear purpose to bring in revenues or cut costs. For the startup businesses who want to hire you at substandard rates, and who’s idea you believe in, demand copyrights to all of the work until they pay in full. For people with brochure sites, offer them a low price, but retain the copyrights, and charge them quarterly for hosting and minor updates. Once the brochure site is up and you are hosting it, it is hard for your customer to switch to another solution if your hosting and update contract is cheap (but very profitable for you).

    The best types of businesses are ones with a valid and working business model that will be amplified with your web site.

    Scope creep is also very hard to manage, because most clients don’t understand how much time it causes to make this “one little change”. The best way to manage this is to divide the project into short milestones, and never talk about a scope change until a milestone is delivered and fully paid.

    The economics of software development has come to the point where development is very cheap and hosting is relatively expensive but still cheap. However, for the operator of the site, the most valuable part of the site is in its operation and data management. It almost makes sense to use site development as a loss leader to providing operations and data management, both of which are much more profitable than developing software.

    0
  50. 78

    I liked reading this article. I tend to be the quiet/reclusive type, so negotiating with people is hard for me. I think I’m getting better at it, and I like your suggestions.

    0
    • 79

      Speider Schneider

      July 16, 2010 10:28 pm

      If you go into a meeting or discussion prepared with what you want, then it’s easier to negotiate. If what a client is saying makes you uncomfortable, you need to make a counter offer. If you feel you’ve gotten a bad deal, how can you really put yourself 100% into the project?

      Just don’t answer any negotiation on the spot. Use the examples I mentioned in the article and beware of those who want to put you on the spot. That, in itself, is a sign of disrespect.

      Good luck and thanks for your response!

      0

↑ Back to top