Are You Annoying Clients With Negative Terms & Conditions?
If you’re a freelancer or run a small agency, you should include Terms & Conditions in your estimates or contracts.
There are two critical reasons for Terms & Conditions:
To define and limit the scope of the job
To define payment terms
The trick is to use Terms & Conditions to protect yourself without annoying your clients.
Here’s how…
We Kept Our Terms & Conditions Positive (Not Negative)
In general, we were happy working with our clients. We looked forward to our meetings and calls with them and were grateful for the jobs.
For the most part, they were satisfied working with us. We kept some clients for many years. One even told us, “Working with you is the most fun part of my job.”
We made sure our estimates reflected this positive outlook.
That’s why we used detailed estimates rather than heavily lawyered contracts. We found most contracts to be negative and punitive in their approach. “Do this or face this penalty.” No thanks…
Terms to Define the Scope of a Project
We always wrote detailed estimates that outlined any project and answered basic questions such as:
What are the details of the job?
Is this a new initiative or is it part of an established program?
What background or research materials will the client provide?
What guidelines or standards should we follow, if any?
What are we providing for this project?
What steps will we go through to complete this project?
Where do we need client approval before moving on to the next step?
How many revisions are included in the estimate, and when will we start charging for extra revisions?
What is the timeline? What are the critical dates?
How do we expect to get paid? This might include deposits, progress payments, net 10 days, net 30 days, discounts for fast payment, retainers, etc.
I wrote about how to write estimates that win projects here.
Our Terms & Conditions Looked Modest
If you saw one of our estimates, you’d see the Terms & Conditions made up a tiny part. Typically, it was some version of this:
Terms & Conditions
This estimate includes up to two rounds of revisions. Further revisions, if necessary, will be estimated in advance.
Payment terms are 25% deposit, 25% upon concept presentation, and 50% upon completion. See attached calendar for critical dates.
Below that, we’d have a spot for the client to sign off. That was it for our “legal jargon”.
Note how we phrased the terms around revisions. We didn’t say what we deemed a revision, but in our discussions, we let clients know that it would technically be a revision any time we opened the file.
We encouraged clients to gather all the changes so we could make them at once rather than dribble them in one at a time.
Also, if we had completed two rounds, we would provide estimates if they wanted further revisions. They needed to understand what the revisions would cost before we did them. Sometimes when they saw the cost, they would change their mind.
Don’t get sucked into doing endless rounds of revisions without letting the client know the costs they’re running up. You’ll have arguments about it later, guaranteed.
Also, although two rounds were included, there was no discount if there were no revisions.
Payment terms were relatively straight-forward.
Note that this is an example. All of these terms can be changed. We had a client asking for five rounds of revisions to be included, knowing how they operated internally. Fine, we adjusted our estimate accordingly.
The same with payment terms. In some cases, they were Net 30 Day, 2% Discount 10 Days. Some clients, especially those with procurement departments, respond to the offer of a discount for fast payment. We knew this and made sure our estimates had it built in. We weren’t giving away money.
We Didn’t Include: Rush Fees, Late Payment Fees, Kill Fees
These are the ugly, negative Terms & Conditions you often see in some contracts. We avoided all of them.
We never charged rush fees. I see people online asking how much they should charge for rush fees. The answers are anywhere between 25% and 300%.
Or they would say they wouldn’t charge rush fees if they weren’t busy or could fit it into the schedule. Yet they would let the client know that rush fees would usually apply.
We didn’t do any of that. We never talked about rush fees, ever.
First, we never did rush jobs for new clients. If someone came to us and the first words out of their mouth were about a rush job, we’d be too busy to take it on, sorry. That’s the wrong way to start a relationship. (Or if the first words were about how cheaply we could do the job.)
Rush jobs were seen as favors to good clients who found themselves in a jam.
They usually knew they were hoping for a favor when they asked, “Can you please help me with something that I need tomorrow?”
We would talk about it and do our best to accommodate it. Since all of our work was billed by the project, we would quickly pull together an estimate and get approval.
That estimate might be a bit higher than usual, but we never discussed it in terms of a rush fee. It could be a small $500 job, which under normal circumstances, we’d estimate at $400. Clients were grateful that we could get it done. We saved their butt and met their deadline. Money was never an issue.
We didn’t want clients to feel like they’d been penalized because they slipped up. They already felt bad enough asking for the favor.
We didn’t use late payment fees either. On some company invoices you see a line that says, “1% interest per month on late payments”.
Yes, we had some clients that were late in paying. But consider all the work that would be involved in collecting any late payment fees. You have to calculate the fee and then issue another invoice. You have to let them know it’s coming.
Then you have to collect it. What if the client pays your original invoice but not the late payment fee? How much time will you spend chasing that fee and probably ruining a client relationship? Would you go to small claims court over it? We didn’t do it, ever, at all.
We either adjusted our pricing to include the “banking fees” or worked with the client to improve their payment practices. If worse came to worse, we became “too busy” to do another project for them.
We also didn’t have kill fees. Our estimates were straight-forward, with bigger projects broken down with associated fees and payment schedules. If the client cancelled the job half-way through, we had likely already collected much of what was owed, and we all knew what remained. It was never a problem.
The Secret is to Have the Right Clients
You can simplify your Terms & Conditions when you have the right clients. You don’t have to anticipate every little thing that might go wrong with punitive Terms & Conditions.
With good clients, 99% of these issues will never happen. You can settle the few that do with a conversation.
Our clients were all corporations or organizations. They were professional clients with established budgets. We weren’t taking anyone’s personal money.
Also, because of our long-term relationships, these clients depended on us. They didn’t want to ruin our relationship any more than we did.
We took a positive, optimistic approach when we looked for new clients. We avoided the ones who didn’t see the world the same as we did.
Think about your Terms & Conditions and see whether you can simplify them or, at the very least, make them as positive as possible. In a client relationship, everything counts. Don’t let an unexpected “rush charge” ruin it.
No one wants a working relationship loaded with negative Terms & Conditions.
I wrote how to build strong client relationships to grow your business here.
Do You Have a Contract Written by a Lawyer?
Many companies use either templated Terms & Conditions or ones drawn up by a lawyer.
If you have either of these, review them to see whether all terms are necessary. For the ones that you keep, consider re-writing them to make them as client-friendly as possible.
Speaking of lawyers, consider this when you’re reviewing your terms. Would you hire a lawyer to enforce any of your terms? Is it worth the cost for whatever you’re hoping to recover?
In our case, the answer was no. We never hired lawyers to go after any clients for anything. It wasn’t worth our time or money.
We had detailed estimates and collected our money appropriately.
If you want to learn more about Terms & Conditions for your freelance or agency business, I wrote about it in my book, How to Start a Successful Creative Agency. It’s the essential business guide for graphic designers, copywriters, filmmakers, photographers, and programmers.
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