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Subject:Re: Contract and payments From:"Jeanne A. E. DeVoto" <jaed -at- JAEDWORKS -dot- COM> Date:Wed, 21 Jul 1999 22:54:31 -0700
At 9:58 PM -0700 7/21/99, Eric Westra wrote:
>I'm a technical writer getting into contract work and need some advice
>regarding terms and payment.
>
>How do you handle the deal? Do you get some money up front after
>establishing an hourly rate? Is there a lump sum paid at the completion of
>the project after equal payments?
There are two ways you can set up payment in a contract: you can be paid by
the hour, or by the milestone. (There are some variations and combinations
- for example, you can be paid hourly with a cap on total number of hours -
but these are the basic methods.)
If you're being paid by the hour, you bill for hours worked. No lump sums
are normally involved. If you work 20 hours this week, you bill for 20
hours for the week. This method has the advantage of simplicity, plus an
assurance that you'll end up getting your rate even if you mis-estimate how
many hours the job will take. (The flip side of that is that
underestimating total hours makes your client unhappy, since they end up
paying more.)
If you're being paid a lump sum for the project, you set up milestones. For
example, you might have 25% due in advance, 25% on submitting an alpha
draft, 25% on submitting a final draft, and 25% due on final acceptance of
the completed manual. This method has the advantage of predictability - you
know exactly how much you'll make from the contract. But if your estimate
turns out to be on the low side, you'll make less per hour than you expect
- perhaps much less.
>When you bill, do you usually bill NET 30 or shorter?
Net 15 to most clients. Some will only accept Net 30. (I don't accept
clients that want me to wait more than 30 days - that's too damn long.
Fortunately, most clients won't try to get away with this.) However,
realize that clients are sometimes late, so you need to make sure a late
receivable won't cause you financial difficulty. It's a sort of rule of
nature that clients who have been rock-solid reliable suddenly start losing
your invoices the month you're short on cash. ;-0
