Charging clients for communication is somewhat of controversial business practice. On one hand, you want to bill for the time you invest into all client-related issues. On the other hand, most clients won’t be happy to pay for something they feel should be free.
How Much Does Client Communication Cost a Business?
The answer to this question can be observed from two angles:
- How much money are you losing?
- How does the communication impact your business otherwise?
The Monetary Angle
Any serious business understands that employee time is one of the, if not the most important resource. A couple of hours of work for a small client requires years of education.
Hence, losing this valuable resource and not charging for the service doesn’t sound like a good idea. That is why many employers are struggling when thinking of a strategy for how to bill a client for a phone call, meeting, or email exchange.
Communication with clients is a complex issue. Namely, when an employee is suddenly asked about the state of a project (or any other issue), their workflow is interrupted.
In other words, the employee has to stop working on their current task. Then, they have to give the client a clear answer, which sometimes requires interrupting another employee or manager. Finally, they need to re-focus on their work.
In other words, when you’re figuring out how or whether to bill for time spent on communication, you should also consider the real time these conversations take away from your team.
Should You Charge for All Client Communication?
This is another element of the discussion you should keep in mind. Is all client communication billable by nature?
The clients will certainly have an opinion on this. If you’d ask them, however, they’d probably say you shouldn’t bill for time spent on communication at all.
That is why you need to consider both sides of the conversation. There is a good rule regarding this conundrum. Namely, you should consider whether the communication benefits the client or your company.
For example, your team will spend a lot of time on initial negotiations. To put it differently, the meetings and calls before the project are benefiting you, as you’re securing a job.
On the other hand, the clients will often initiate conversation during the project. They’ll ask for information, make changes, and request additional services.
The time spent on this type of communication benefits the client. Additionally, it takes away employee time that could have been spent on the project.
This makes things seem extremely easy, right? You should bill for the time that benefits the client and refer from billing in the other cases. However, things aren’t as straightforward as they may seem.
The Importance Issue
Not all clients are equal. Moreover, many companies get most of their profit from a selected handful of projects. On the other hand, some clients can cost the business more than they bring.
This is an important distinction you should make. If a client is putting you in the red, but still requires constant communication, you should definitely look into how to bill hours spent on that communication.
If this doesn’t break you even, you could even think about terminating the collaboration with them. This way you will be making more money with less work. in other words, your productivity will increase.
On the other hand, the bigger clients, who bring a lot of profit to your company, should be treated differently.
That is to say, you want to refrain from charging for communication. Or, at least, consider the fee you’ll be charging them.
How to Know How Much to Bill?
If you are starting to bill for time spent in communication, you need to set rules for yourself.
There are multiple options for this practice, and we are going to examine several of them
Charging the full price – you may decide to charge for time spent on communication by your standard fees. The positive side of this practice is that you’ll definitely be making more money.
Additionally, you will discourage the clients from taking away your team’s time. Of course, you will need to inform the clients of this policy. We advise doing so before starting the project.
This is where we get to the negative. Many clients will reconsider working with you if you charge the full price for communication.
Special fees – this is a more popular solution for the clients. Many law firms, for example, charge their clients half the usual fee for communication.
A hybrid deal – finally, you can decide to allow your clients some free communication time. The details of these deals need to be defined upfront.
Here is an example: your new client has two meetings and five phone calls that won’t be charged. Once the communication goes over these limits, you will charge them.
As you can see, the two latter cases give some leeway to the clients, but still set serious boundaries. Thus, you won’t be losing (too much) time, and the client will still get some free communication.
The Importance of Being Accurate
None of the abovementioned systems will work to your benefit if you don’t have a reliable time tracking solution.
Namely, the clients, no matter their trust in you, will want to know what they’re being charged for. That is why, for example, an appendix to the bill can be a great idea.
The appendix should account for all activities done for a client during working on their projects. This includes communication.
Additionally, the hourly fees included in the appendix will keep your reputation as clean as ever.
Billing for the time dedicated to communication is an issue that doesn’t have a universal answer. That is why you should pay attention to
- Your company’s status in the industry
- The clients and their expectations
- Abovementioned pros and cons for every specific case
Before deciding whether to bill a client for communication.
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Bojan Radojicic, Master Degree in Economics, is a financial performance consultant with more than 15 years of experience. He is responsible for adding value services based on innovative solutions.