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Thread: Selling Hourly Bundles

  1. #1
    Platinum Member Neville Bailey's Avatar
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    Selling Hourly Bundles

    As a consultant my income is largely made up of consulting hours sold, as well as software sales.

    I insist on upfront payment for software, but consulting time is normally charged in arrears - as a result, I am constantly chasing up outstanding payments.

    I haven't increased my rates for two years now, but I feel that now's the time to do so.

    For some time I have pondering over the idea of selling upfront hourly bundles at a discount. For example, if a client bought a 5 hour bundle upfront, they would get a 10% discount on my current rate, and if they bought a 10 hour bundle upfront, they would get a 20% discount, etc. They would then draw down on their bundles and top up when the bundle gets depleted.

    I thought the timing would be ideal if I advised my client base my intention to increase my rates from 1 February, together with the offer of upfront bundles at current rates. If they took up the bundle option now, not only would they enjoy my pre-increase rates beyond 1 February (provided the bundle was not depleted), but they would get it at a discount!

    What do you think of my idea?

    Posted from my BlackBerry using BerryBlab
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

  2. #2
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    i think it is a brilliant idea...what i normally do is if i take longer than 6 hours on site i reduce my rate by a percentage and it becomes a day rate for some of my regular customers but they dont pay upfront...i still wait 3 months for payment.

    what i have thought of doing for my customers is to getting them to pay me a retainer on a monthy basis at a slightly cheaper rate which is pretty much the same idea as you only that it will be a 24 months contract.

    when i started out i use to finish work for the day then get in my bakkie and drive around to all the customers who owed me money and collect cheques or cash....my days where long...then as i grew and i got an overdraft i stopped doing it and waited fro payments in the post and so the bad debts grew (if i collected all the money people owe me since i started this bussiness i could pay off my house and van)...i invested in a nice motorbike and i used it to collect money and i started hearing comments like gee we must be paying him to much check out the bike so i stopped using the bike because the payments got more difficult to get on time.

    why people cant just pay their bills...1 of the reasons is they spend more than they can afford and use credit until they are so throttled with catch up debit...service fees...interest...finance charges...etc...the bottom line is if you dont have the R500 to buy the nike takkies cash you shoudnt be buying them...and i speak from experience...i go thru these dips...i spend spend spend then realise oops now i dont have money to pay my telephone account so i use the credit card and before i know it nobody is getting paid only the arrears on the credit card....then i go on a mission like i am now to make money...to catch up and before you know it back at square one...it should be the other way around the money in my credit card should be in the black not the red before i start spending...the problem is everyone down the line suffers...it creates a chain reaction...you dont get paid so the person you owe money doesnt get paid and so on.

    oops turning a simple answer into a 5 chapter book again.
    Last edited by murdock; 23-Jan-11 at 09:37 AM.

  3. #3
    Site Caretaker Dave A's Avatar
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    I like it too. The timing sounds good and you're leaving the client with options - just providing an incentive for a more cash-flow efficient payment scheme.
    The trouble with opportunity is it normally comes dressed up as work.

  4. #4
    Diamond Member Justloadit's Avatar
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    I wonder if it would not be better to set up a debit order system, in which you draw on the same day of the consultation? This is the time the client is the most vulnerable and amicable to releasing the funds for you having sorted them out. Yes there is a cost for the debit order, but you would immediately have your payment, and your solution is very fresh on their minds, and there would be no reason not to with hold payment.

    From my experience, the happiness of the sorted out solution gets lost as every day goes by, and now becomes a grudge payment.

    Just a thought.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar and LED lighting solutions - www.microsolve.co.za

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    Full Member greghsa's Avatar
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    I got this off the internet and it relates to an IT company, but you can modify it for your purposes.
    Client will basically tick what option the want. It will need to be signed and accepted by the client.
    Basically if they still want to be billed in arrears it will be at a premium

    AGREEMENT IS FOR ONE OF THE FOLLOWING SERVICES: [Please Select One]
    12-Month Retainer Agreement -- By committing to a 12-month retainer agreement, you are assured our top priority for project assignment, with time recorded in quarter hours. Any unused hours are carried forward to the next month, and can
    be banked for future projects.
    ___ 5 Hours/Month R 1,675/Month Paid in Advance [R 345.00/Hour for Extra Hours]
    ___ 10 Hours/Month R 3,250/Month Paid in Advance [R 335.00/Hour for Extra Hours]
    ___ 20 Hours/Month R 6,400/Month Paid in Advance [R 330.00/Hour for Extra Hours]
    ___ 40 Hours/Month R 12,200/Month Paid in Advance [R 315.00/Hour for Extra Hours]
    Buying Hours in Bulk -- By purchasing hours in bulk, you get many of the benefits of a retainer, but without
    committing to a 12-month agreement. You get our second highest priority for your projects; time recorded
    in quarter hours, and you can take advantage of significant savings over our standard hourly rates (normally R350.00).
    ___ 10 Hour Block of Service R 3,450 Paid in Advance [R345.00/Hour]
    ___ 25 Hour Block of Service R 8,375 Paid in Advance [R335.00/Hour]
    ___ 50 Hour Block of Service R 16,500 Paid in Advance [R330.00/Hour]
    ___ 100 Hour Block of Service R 31,000 Paid in Advance [R310.00/Hour]
    Time and Materials -- Time is invoiced with a 1 hour minimum, and 1 hour increments.
    ___ Web site design & layout Starts at [R4,700.00/Site]
    ___ Programming of Scripts, Databases and Applications [R370.00/Hour]
    ___ Training, Technical Support & Web Site Maintenance [R370.00/Hour]

  6. #6
    Email problem ava_camen's Avatar
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    yes this is a good idea. letting your clients know at an earlier time of the increase in price is essential at the same time informing them with the discount is an added good news for them to keep in mind

  7. #7
    Platinum Member Neville Bailey's Avatar
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    Just an update...

    My offer has been well received by my clients.

    A quite significant number of my clients have taken it up, and I'm less stressed about chasing up outstanding amounts.

    A win-win all round!
    Neville Bailey - Pastel Accounting Consultant and Photographer
    neville@accountingsoftwaresupport.co.za
    www.accountingsoftwaresupport.co.za
    View Neville Bailey Photography

    *** 20% DISCOUNT ON PASTEL XPRESS / PARTNER SOFTWARE UNTIL 15 DECEMBER 2017 ***

    "Give every person more in use value than you take from them in cash value."
    WALLACE WATTLES (1860-1911)

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    Dave A (31-Jan-11)

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