We’ve all been there. Everyone is familiar with the traditional milestone-based model of billing – 50% of the project fee to start and the remaining 50% upon site launch. On the surface, this seems like a straightforward and fair approach because ensures a healthy down payment to get the ball rolling and a reward waiting at the finish line.
Yet, in reality, we often find ourselves stuck in a quagmire of incomplete projects, with no end in sight and the promised second payment hanging in the balance. Sometimes, it seems like that elusive launch day might never arrive, and along with it, the final chunk of cash you need in your business.
What’s worse, this milestone-based approach can inadvertently incentivize clients to drag out projects and flood you with endless change requests. They’re probably nervous about losing access to your help, and they want to squeeze out maximum value before parting with that final payment. In the meantime, they are overwhelmed, anxious, and uncertain if they have made the right requests to get leads from their website.
And you? You’re left taking orders, with little room for creative or strategic input.
Fortunately, there’s a more efficient way to manage these projects and the billing, which not only promotes a healthier cash flow but also a more fulfilling relationship with your clients. Check out the date-based billing model.
The Date-Based Billing Revolution
When we started date-based billing, it felt like we discovered a revolutionary new billing method that turned the traditional approach on its head. This simple switch of mindset transformed how we managed our web design business and client relationships. Here’s how it works.
For example, let’s say you’re charging $3,000 for the website, design, and branding, plus $850/month for the hosting and marketing. The payment terms split the development cost into two payments of $1,500 each, one month apart. Starting with month three, the client shifts to an $850/month plan. Super simple.
Benefits of Date-Based Billing: More Than Just a Payment Schedule
As awesome as consistent revenue is, date-based billing offers a bunch of significant benefits beyond a predictable payment schedule:
- Speedy Launches: Both you and your client are incentivized to launch as soon as possible. If the site launches in a month, you’ll start the marketing plan a month early at no extra cost. That means your client gets a bonus $850 of free marketing by launching quickly.
- You Lead the Way: As the web designer, you take the leadership role, guiding the client based on your professional expertise. Offload as much stuff from their plate onto yours. For example, have your team write the copy for the website. This tends to be one of the big time-drags for web design projects. Also, most business owners struggle to write good copy for their websites. By writing the copy for them, your client gets better results faster while saving them a bunch of time and effort. Plus, charge a little more because now you’re providing the copy!
- Data-driven Changes: The number of change requests goes way down, as the focus shifts to optimizing the client’s website based on data, not their feelings. Launch the site as soon as possible so you can start collecting website traffic to analyze for the sake of making optimizations.
- Clear Communication: It’s easy to explain the payment terms, and the client feels like they’re subscribing to a proven, tested marketing platform.
- Affordable and Consistent: By splitting the initial upfront payment, we still get the benefit of making the project affordable to the client without the risk of messing up your cash flow.
- Lower Risk, Recurring Revenue: Date-based billing is similar to selling websites on subscription, bringing recurring revenue but without the upfront risk of traditional subscription-based websites where the development phase is heavily front-loaded. Then you have to hope the client stays around long enough for the project to pay off.
The Power Pitch: Making Date-Based Billing a No-Brainer
With date-based billing, pitching becomes a breeze. Among a few other metrics, we’re always targeting businesses where the lifetime value of their customers is over $1,000. Now, given your comprehensive solution, ask the client if they thought they could land at least one new client per month. With everything you’re doing to drive traffic, pull leads, and convert clients, would that bring in at least one new client per month?
If so, this is a no-brainer. It only takes one client per month to be profitable. What if they got two clients per month, or even a new client every week?
Just make sure you properly target the right clients, and you’ve got a very strong offer.
Aligning Incentives Accelerates Success
The main idea is that date-based billing is the ideal way to price web design in today’s market because everyone’s incentives are aligned. Your clients get results faster with less stress and effort, and you’re landing recurring revenue clients, each of whom is worth over $10,000 per year.
If you’re sick of projects dragging on and waiting for the site to launch to get the second half of your money, give it a try. I think you’ll love the benefits.