Comments on: Should we be Increasing Rates in Line With Inflation? http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/ Web design and development company blog Wed, 04 Jan 2012 17:04:59 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: Kay Jackson http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/comment-page-1/#comment-129848 Kay Jackson Wed, 04 Jan 2012 17:04:59 +0000 http://blog.voodoochilli.com/?p=695#comment-129848 We tend to look at overhead costs yearly and decide on increasing hourly rate according to that yearly percentage increase. If this is low we tend to just take into consideration employees annual salary increase. If you have no employees and overhead costs are reasonably low it would be worth leaving costs as they are and loooking again in 6 months time. With regards to late payment charges, we tried that one when we had petrol accounts and some clients just knocked it off and was not worth pursuing. Also I believe that the Gov are soon to introduce a law that you can only pass on the admin costs to you re cheques and credit cards so eventually that path would not recoup much. Hope this is helpful. We tend to look at overhead costs yearly and decide on increasing hourly rate according to that yearly percentage increase. If this is low we tend to just take into consideration employees annual salary increase. If you have no employees and overhead costs are reasonably low it would be worth leaving costs as they are and loooking again in 6 months time. With regards to late payment charges, we tried that one when we had petrol accounts and some clients just knocked it off and was not worth pursuing. Also I believe that the Gov are soon to introduce a law that you can only pass on the admin costs to you re cheques and credit cards so eventually that path would not recoup much. Hope this is helpful.

]]> By: Becky O'Connor http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/comment-page-1/#comment-129846 Becky O'Connor Wed, 04 Jan 2012 17:00:32 +0000 http://blog.voodoochilli.com/?p=695#comment-129846 Nice article. We have been wrestling with these issues and need to put in place some measures to ensure smoother cash flow and stronger incentives for clients to pay on time. I like Chris's idea of the 14-28 day late payment fee, with the added flexibility of of agreeing separate terms with individual clients. My only doubt on this is if they are a client who already has a history of late payment and generally being a bit of a pain are you in danger of giving them more leeway to stall on prompt payment. I guess you would have to take it on a case by case basis. I agree that there seems to be a big discrepancy in peoples understanding of payments in the creative industry. Like you say no one would have any qualms about paying up front for a sofa or entering into a credit agreement in order to pay for it, but when it comes to websites and design, some people seem to have a problem. I wonder if its to do with the fact that its not something tangible, the benefits and value to their company are not something they can physically touch. The intrinsic value of a website to a company and the actual value a client place upon it can be wildly different. This opens up a whole new area of discussion which I think you may have touched on in a previous blog piece. Nice article. We have been wrestling with these issues and need to put in place some measures to ensure smoother cash flow and stronger incentives for clients to pay on time. I like Chris’s idea of the 14-28 day late payment fee, with the added flexibility of of agreeing separate terms with individual clients. My only doubt on this is if they are a client who already has a history of late payment and generally being a bit of a pain are you in danger of giving them more leeway to stall on prompt payment. I guess you would have to take it on a case by case basis.

I agree that there seems to be a big discrepancy in peoples understanding of payments in the creative industry. Like you say no one would have any qualms about paying up front for a sofa or entering into a credit agreement in order to pay for it, but when it comes to websites and design, some people seem to have a problem. I wonder if its to do with the fact that its not something tangible, the benefits and value to their company are not something they can physically touch. The intrinsic value of a website to a company and the actual value a client place upon it can be wildly different. This opens up a whole new area of discussion which I think you may have touched on in a previous blog piece.

]]> By: Chris http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/comment-page-1/#comment-129842 Chris Wed, 04 Jan 2012 15:38:34 +0000 http://blog.voodoochilli.com/?p=695#comment-129842 Generally not - they seemed surprised until went through essentially the same argument as you have above. I have to say that the majority now pay between 14 and 21 days, which is fine (and I do not impart a late charge for that). those that don't are the usual suspects shall we say and, as such, deserve the late charges!!! Generally not – they seemed surprised until went through essentially the same argument as you have above. I have to say that the majority now pay between 14 and 21 days, which is fine (and I do not impart a late charge for that). those that don’t are the usual suspects shall we say and, as such, deserve the late charges!!!

]]> By: Voodoochilli http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/comment-page-1/#comment-129840 Voodoochilli Wed, 04 Jan 2012 15:07:08 +0000 http://blog.voodoochilli.com/?p=695#comment-129840 Thank you for your comment Chris. Did any of your clients take the 14 day change badly? Thank you for your comment Chris. Did any of your clients take the 14 day change badly?

]]> By: Chris http://blog.voodoochilli.com/2012/01/04/should-we-be-increasing-rates-in-line-with-inflation/comment-page-1/#comment-129839 Chris Wed, 04 Jan 2012 14:58:06 +0000 http://blog.voodoochilli.com/?p=695#comment-129839 We have the same problem. Our answer has been to reduce payment terms to 14 days. Late payment charges are accrued from day 14 to day 28 at which point the charges go up. In addition an admin fee is charged for processing a cheque. I realize that the 14/28 day payment charges may appear harsh but it does mean that we can keep costs competitive and only those who fail to pay on time will be affected. You can agree separate terms if clients choke at having to pay late fees at 14 days by agreeing a 30 day payment plan but with late charges backdated to day 14 if the client does not pay within the 30 days. If the client is genuine and will pay inside his 30 day window then no probs. If he isn't, and won't, then I would have no qualms hitting him with a late payment fee as described. We have the same problem. Our answer has been to reduce payment terms to 14 days. Late payment charges are accrued from day 14 to day 28 at which point the charges go up. In addition an admin fee is charged for processing a cheque.
I realize that the 14/28 day payment charges may appear harsh but it does mean that we can keep costs competitive and only those who fail to pay on time will be affected.
You can agree separate terms if clients choke at having to pay late fees at 14 days by agreeing a 30 day payment plan but with late charges backdated to day 14 if the client does not pay within the 30 days. If the client is genuine and will pay inside his 30 day window then no probs. If he isn’t, and won’t, then I would have no qualms hitting him with a late payment fee as described.

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