Hourly rates reasonable?

The problem with not agreeing rates in advance.

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I have recently done some adhoc work for a client on a fixed fee, which was quoted and agreed before starting.

Following this work I feel in to doing lots of additional work (different to that noted above) for them in relation to preparation of management accounts.

I have sent my invoice to the client which was at an hourly rate of £85 (same that I used to work out what the fixed fee was for previous work). The client has since expressed they are extremely unhappy with the rate and will be reviewing the invoice.

 

Lesson learned, always agree the fee in advance.

 

Would you say my hourly rate is too high? I know this is becoming less common, but I feel a basis for pricing adhoc work is required.

How would you respond to the client? I dont want to lose them as a clients as I don’t have the luxury of being in a position to cherry pick clients and also because they are a decent client with good future potential.

Replies (10)

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By mrme89
20th Mar 2018 15:15

It doesn't matter what your hourly rate is.

Your client is annoyed because you accepted this additional work, and they thought that it was included within the fixed fee quote. You then presented them with an additional invoice without discussing it prior.

You need to explain that the work was outside the scope of the original quote and therefore the need for an additional invoice has arisen.
It might be that you credit this additional invoice to keep the other work and learn a lesson from this whole episode?

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By Mr_awol
20th Mar 2018 15:52

This is exactly what I was going to suggest - Ive lost count of the number of times I have to tell people to let clients know if a job is going pear shaped. If it's the client's fault and we give them the heads up, they rarely complain about the fee for the extras.

That said, the OP has now indicated that this was a separate exercise (probably - the follow up work was on management accounts and could have been related to variances in the forecasts prepared, but let's assume it's totally unconnected). As such, the complaint may be to do with the number of hours spent rather than the hourly rate.

OP you need to consider whether the client would have expected an additional charge and whether the work was 'worth' what you charged for it. If the answer to either is "no" then you might need to accept a reduction in your fee.

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Oaklea
By Chris.Mann
20th Mar 2018 15:16

"Following this work I feel in to doing lots of additional work" although not vital, to the crux of your enquiry, I'm really struggling with the phrasing of your enquiry.

Whether the £85.00 per charging hour is too high will depend on a number of factors, possibly too many to list here - skill required, base of operation, etc etc. In some cases, the hourly rate may be set too low?

These days, time sheets and charging by hourly rate seem something of the past and, possibly more relevant to your enquiry is the fact that, certainly in this day and age, you have to be completely transparent with those who seek to engage you. In other words, outline and formally agree what your charges will be and, if there are any variances, those are also set out and agreed in advance.
This might be an expensive and salutory lesson for you?

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By Yalnif
20th Mar 2018 15:27

I prepared some business forecasts which was the original task I was asked to do.

Then very quickly afterwards I was being asked questions about the management accounts and ended up helping prepare these, including accounting for an acquisition of a company in the period, bank reconciliations and month end journals. The month end was fast approaching, with the finance team depleted following some leavers, which is how the additional work from the FD came about.

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By andy.partridge
20th Mar 2018 16:01

You charged 5 hours at £85/hour. I charged 3 hours at £100/hour. Whose invoice would your client have been happier to pay?

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By MissAccounting
20th Mar 2018 16:10

Yalnif wrote:

I prepared some business forecasts which was the original task I was asked to do.

Then very quickly afterwards I was being asked questions about the management accounts and ended up helping prepare these, including accounting for an acquisition of a company in the period, bank reconciliations and month end journals. The month end was fast approaching, with the finance team depleted following some leavers, which is how the additional work from the FD came about.

Hindsight is a wonderful thing but at the point of them asking you to do the additional work you needed to inform them that this was outside of the scope of the agreed work and would be charged at £85 per hour also giving them an estimate of the time it will take to complete the additional work. I too would potentially dispute a bill if I wasnt informed about it.

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By Matrix
20th Mar 2018 16:20

If they are big enough to have an FD then they should know that if you ask for extra work then you should expect to be charged. What does it say in your engagement letter?

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By jon_griffey
20th Mar 2018 17:47

It's good to be clear about charges in advance, but this is not always easy as there is the problem of mission creep. e.g. a fixed fee piece of work, leads to some questions (which you are happy to include in the fixed fee), then more questions, then more questions and before you know if you have another 10 hours on the clock.

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By davidmike3390
21st Mar 2018 11:12

The fixed rates for the assigned work will not be changed till you discuss with the cleints. If clients assign additional work which is cost more than your hourly rate then, you should discuss before start working. Without proper agreement. Never add extra cost in your invoice till you have a word with clients.

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By adam.arca
21st Mar 2018 13:38

Personally, I don't see this as being an issue over communicating rates or hours. For me, the communication problem (actually, a two-fold one) is more about managing client expectations. We've all been there.

Firstly, there needed to be communication when asked to do the extra work along the lines of "you do realise that's extra work and we'll be charging for it."

And prior to that, the original fixed fee quotation should ideally have said something like "the fee we have quoted relates solely to the work we have scheduled and, specifically, any further work arising no matter how closely related it may appear to be is not included."

Bottom line, though, this does sound like a try-on by the client.

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