Posted by: Sotiris Filippidis
25 June 2023
As an Umbraco - focused Development and Support agency, we provide retainer plans to clients more often than not. Clients, whether they are site owners or other agencies, usually need a mix of services that include support, performance enhancements, and bug fixing, as well as new features or upgrades, for a single or for multiple projects.
The best way to provide all of these services is to agree on a fixed number of hours that can be spent on any task the client requires, in the form of a plan, and renew their contract when they are depleted.
The advantage of this type of billing, in the way we implement it, is that clients have direct access to the time sheet and can, at any moment, see what time was spent where. Moreover, they are only billed for the actual time consumed. It’s essentially T&M, but in a more organized way.
This has its own caveats, of course, both for clients and providers. Timesheet padding, i.e. logging more time than what was actually spent on a task, is one of the most known bad practices that is unfortunately followed by a (fortunately, relatively small) number of companies.
Every agency seeks to maximize its revenue. However, using tricks like time padding or even making assumptions that have never been shared with the client can irreparably damage your credibility in the long run.
Clients who have had such bad past experiences can be very suspicious and prone to dispute either specific time logs or, in some cases, even the whole thing.
Let’s admit it, time tracking has never been an exact science. Small mistakes are made all the time, but they’re negligible as long as they’re not intentional.
Every agency seeks to maximize its revenue. However, using tricks like time padding or even making assumptions that have never been shared with the client can irreparably damage your credibility in the long run.
How can ethical billing help
Ethical billing is the way to establish trust with your clients, both existing and new ones. Let your clients know that you are following specific processes regarding billing and following them to the letter. And, most importantly, strongly communicate what you are billing the client for.
Most agencies that provide retained hours get confused with what should be billed or make assumptions that are never shared with the client.
Let’s take a hypothetical agency, “TooOptimisticDevs”, as an example. TooOptimisticDevs won’t bill client meetings expecting that they’ll be short and rare, nor will they bill time for responding to emails related to a task.
TooOptimisticDevs later realize they have had 10 hours of meetings last week and also that responding to task-related emails took 3 hours for an 1 hour task. Understanding that they’ll be losing money, they’ll either accept it and go on, or try to compensate by retroactively billing the “lost” time or, what’s worse, sneaking in some extra time in their existing time logs.
This is a lose-lose situation. TooOptimisticDevs have to choose between billing less work than actually done or risking losing the client since, in the absence of a solid description of what’s billed and what’s not, they will have to start doubts or, even worse, feel deceived.
Don’t be “that” agency
So what can you do to ensure that your billing is really ethical but at the same time not lose time (translated to money)?
Clearly describe what will be billable and what will not. For example, we always include, both in our quotes and in our contracts, a clause that describes that any work, including communications, related to billable tasks, will also be billed. This includes emails, meetings, chats, and any other form of communication. On the other hand, we provide free bug fixing for a specific period of time after delivery (yes, we’re that confident :) )
Be precise in your time tracking. Use timers or a time tracking app, or a combination of both. Stop the timer when you stop working for the client, restart it when you resume. Don’t include your lunch time or that phone call you made to your hairdresser in the total time logged. It may seem quite a fuss to do so, but it’ll cost you more in reputation if you don’t.
Establish a minimum time log per instance / ticket. This can be 5 minutes, 10 minutes, or half an hour, but the important thing is that it must be there. Each action you take for the client needs you to switch your attention from other things, requires some time itself, and then takes some more time so you can concentrate on other things again. Be sure to let the client know that if, for example, you’ve set 5 minutes as the minimum time logged per ticket and they open 12 tickets, they’ll be billed for an hour at minimum. Don’t just assume they’ll think it’s justified, let them actually know.
Log your time with detailed descriptions. If you’re using a task and time tracking system, don’t get comfortable just knowing that your time has been logged against a specific task - add a description to each log entry outlining what you worked on in more detail.
Make the time log available to your client in real time. Don’t wait until invoice time to provide the client with a huge list of time logs. Use a Google Sheet, or give your client access to your time tracking system. We’re using Teamwork Projects and we always give our clients access to the time log so that they can have an always up to date view of how time they’re paying for is spent.
Never bill for things that shouldn't be billed. If you offer a free bug fixing guarantee, stick to it. If something is messed up due to your own actions (it happens) don't charge for fixing it.
Even if everything is perfect, be always ready for small disputes. Have in mind that the client, even under the best of circumstances, might still dispute some specific items in your time log. If that happens, be understanding. Try to find out why the client thought they shouldn’t be billed. Be prepared to compromise if the log in question has a fuzzy or incomplete description or if you haven’t explicitly communicated what is billable and what is not.
More importantly, build trust with the client. When trust is established, disputes tend to be minimal. All of the above help, but of course what counts more is always the quality of your actual work.
(This article is 100% AI free, written entirely by hand)
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