Re: Structuring payment schedule based on doc deliverables

Subject: Re: Structuring payment schedule based on doc deliverables
From: Andrew Plato <intrepid_es -at- yahoo -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Sat, 10 Mar 2001 11:56:13 -0800 (PST)

"Johanna" wrote...

> I am writing up an estimate for a fixed-price project
> and I want to breakdown the payment schedule to
> reflect the project deliverables. I am producing two
> user manuals from scratch in a fairly short period of
> time (less than 8 weeks). A fellow freelancer
> suggested the following payment schedule:

Staggarded arrangements like this are problematic. Clients will argue about the
delivery date. You could be 3 to 4 phases in before you get paid for the first
phase. If they decide to kill the project and you're mid-phase - you're hosed.
I just had a client kill a project (for technical and marketing reasons). We
had invested nearly 100 hours without delivering anything significant. Its not
our fault they can't figure out what projects to pursue. Because we are paid
hourly, not by deliverable, they still have to pay us for that time.

Straight hourly rate agreements are much simpler. Make a project plan that
tells the client approximately how long each phase will be. Then they can see
exactly what each chunk will cost:

First Draft Doc 1 75 hours $50.00/hr $3750
Reviewing Doc 1 40 hours $50.00/hr $2000
First Draft Doc 2 125 hours $50.00/hr $6250
Reviewing Doc 2 40 hours $50.00/hr $2000
-------
Grand Total $14,000

However, since you only bill for the time you work, you can strive to get
phases done under the estimated hours. Thus, you appear to be saving the client
money.

Consider that a full month's worth of work, 8 hours a day is about 160 hours.
If you're burning hours really fast, it can be as much as 200 hours. So, if it
will take you two months to do something, estimate about 360 hours (180 * 2)
that gives you 40 hours of overspill. Then if you bill in at 290, you look like
a genius.

Its always best to work on an hourly basis. Its much simpler. They pay you for
your time, not merely the production of work.

Andrew Plato

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