You’ve been wondering if you should charge your virtual assistant clients by the hour at the end of the month or if you should create a VA Retainer Package and require payment up front. Let me break down the pros and the cons of both and why I believe virtual assistants should work with a retainer plan (tweet it out).
Submitting invoices at the end of the month – PROS
What I like about submitting invoices at the end of the month is that I don’t have unused hours that carry over into the next month. I start over clean each and every month. I have full visibility into my work schedule for the next month so I can manage my work schedule accordingly.
Submitting invoices at the end of the month – CONS
When you submit a client invoice at the end of the month for hours worked and let’s say it’s a new client, how can you be sure you’ll get paid? Perhaps you have a contract and let’s say in that contract you stipulate that the client has until the 10th of the month to pay. The 10th comes and goes. Are you going to pursue legal action? Are you going to add a late fee? These are all things to consider when you charge your clients by the hour and submit your invoice AFTER you’ve performed the work.
Retainer plans – PROS
When you work on a retainer plan you can trust that you are going to get paid and on time because you won’t begin any work until the money is in the bank. I don’t begin any projects with any new clients until they have paid my retainer fees in full. I don’t offer 50% of my retainer free up front and the other 50% of my fee after the work has been completed. Lawyers don’t work like this, I don’t either.
Retainer plans – CONS
Virtual assistant retainer plans are great but what happens when when there are unused hours left over? Do you carry the time over or expire the hours after a certain time period? If you’re flexible and you don’t put an expiration date on the time than any unused hours that carry over make it hard for a virtual assistant to budget his/her time into the following months. This can create havoc on your work schedule. This is often why virtual assistants put an expiration on their virtual assistant retainer packages.
Another point to bring up about retainer packages, let’s say you get paid $400 in January for 10 hours. At the end of the month you have only worked 4 hours so the remaining time carries over into February. So now you’re in a situation where you are not going to get paid again during the month of February. This means that unless you have a new client in the pipeline or another client is giving you more hours, you’re going to earn substantially less during the month of February.
The only way to rectify this is to put a clause in your contract that stipulates that your retainer hours do not carry over.
I do not expire my retainer hours. I have tried both options for my business and I’ve decided to be more flexible with my clients. My reasoning is that most of my clients are small business owners and they are working with a small budget for virtual assistant services. The more I restrict them (and effectively cost them more money), the more likely they are going to look for a cheaper alternative. At the end of the day, if a business can’t afford you, they can’t afford you, no matter how amazing you are.
This can be hard (but very rarely occurs) for me when I’m trying to budget my time each month, but it’s helped me build long lasting relationships with my ideal clients who love working with me. So because of this, I feel it’s important to be flexible and offer retainer hours that do not expire. It’s an added bonus that my clients truly appreciate.
One last option that I’d like to bring up is a per-project quote.
Let’s say you have a new client that has a project that he/she wants done and they don’t want to commit to a retainer plan. Go ahead and offer a quote for the work. It may be hard at first to determine how long it will take you but as you do more of these projects it will get easier. This is a great way to build a relationship with a new client without them taking on the added costs of a retainer plan.
I suggest you find what works best for you and your business. You have to make the right decisions as a entrepreneur and making decisions means you’ve tried out all the options and you’ve chosen the right one, that works best for you.
So what do you think about virtual assistant retainer plans vs working by the hour? I’d love to hear your thoughts in the comments below.
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34 thoughts on “VA Retainer Package Or Bill At The End of Each Month?”
I have been charging by the hour and billing on the 1st of each month. Have just implemented Rates packages. Only one of the 3 packages is valid for 60 days. The other 2 are 30 days. Payment will be the same as hourly based – invoiced on the 1st of the following month. So I get paid once the work has been completed. I prefer it that way. So far, no bad debts.
Great article – thanks. I have recently been bitten by a client who refused a retainer package and I agreed to let him be billed at the end of the month. How I regret it now, as he still owes over 30% of his bill and is refusing to pay – he says, he feels the service (even though he signed a contract and agreed to the Terms and Conditions (and was kept appraised throughout)) says it was too expensive!
Expensive lesson to learn but I have learnt the lesson!
I offer both types, hourly and retainer package. They both work week, just depends on the client.My retainer requires 25% upon signing contract (all projects, even hourly have a contract) and remaining balance due upon receipt of goods, which I allow them up to 5 business days to pay.
They have options to pay via PayPal, cashiers check, directly deposit into bank account or cash.
If they choose to pay by personal check their is a statement in the contract that points out the customer is liable for all NSF funds fees caused by their ad check.
I also have a 10% late fee for all invoices not paid on time and it increases after 30 days to 50%!
A total of two clients have written bogus checks, they had penalty fees added on and were sent a certified letter demand for payment. Only had to take one of them to small claims court, which I won for calling out all details in the contract and ended up winning an additional $150.00 from the court hearing for hardship it caused.
Outline the details, explain thoroughly and if they are honest and trustworthy professionals, they will understand!
Michelle, I can’t believe you ended up in small claims court. Good for you for standing your ground and not just letting these clients get away with writing bogus checks!
Michelle,
Would you be willing to share a sample of the contract you use with me. I’d be very interested in securing a contact that holds up in court. Great piece of mind comes with that.
Much appreciated.
Linda Rae Dixon
Wow, definitely a hard lesson but now you’re all the wiser.
You definately have to find what works best for you and client base.
I work with direct sales leaders who, for the most part, request similar projects thruout the month. I set flat prices on these common projects (based on my time) for ease of billing and so they would know ahead of time what charges they are incurring. The first of this year I changed my billing/payment system. I only accept credit card payments now (use Paypal) and bill my clients on the 15th and 30th of each month for work I’ve completed in that 2 week period. Invoices are due upon receipt and all clients must have an active credit card on file with me. Invoices not paid after 48 hours are automatically processed on their credit card from my end. This system is working like clockwork and helps with monthly cash flow issues since I’m getting paid twice a month now instead of one.
Reese,I am so glad that you posted this information. I am a new VA just starting out and was in question about how to charge my clients. From what you have put and what everyone else has commented, I am a little more clear now.
Thanks to all of you.
April – LOVE that we’ve all been able to make your life a little bit easier now that you are one step closer to determining your rates! Let us know how things go! XOXO
Do you have examples of contracts that you use for signing up new clients that you can share. This would help me out a great deal as I”m new in the business and any help would be greatly appreciated. thank you
I bill at the end of the month. I am subcontracting for someone and this is how she wants it done. That is a nice easy way to do. I also charge per-project as well, depending upon what the scope of it is and how long it would take.I have a PayPal so I bill directly from PayPal and have clients pay me that way. I don’t take checks or credit cards.
John Hardy
Thanks for sharing these insights. I just touched on some of the same issues on my site.
Hi Reese,I offer four options with pricing customized to the clients needs:
Hourly Plan, Project Plan, Rush Plan, and Retainer Plan. Most of my clients are on an hourly plan with no set hours and are billed at the end of the month.
I am looking for suggestions on how to propose, offer and get more consistent business on a regular basis?
Also, upon signature of an Agreement, I have all new clients pay a 50% deposit of the estimated first billing prior to the commencement of any work.
Any feedback would be much appreciated!
Darlene
I bill by hour – to the minute – and I invoice monthly. I invoice about half of my clients on the 1st of the month and the other half on the 15th. This gives me a steady income and allows me to work with clients so they can pay when it fits their budgets. My contract says if no payment is received then I charge a late fee and stop work until all unpaid balance is paid including the late fee. I am flexible on actually charging the late fee – I always try to keep the lines of communication open but sending a reminder if payment isn’t received. I (knock on wood) have not been “stiffed” – I have had to wait months for payment but it has always come in.
Debbi
Debbi I too bill my clients by the minute. I use Freshbooks which has a great timer that allow for this.
With a multi-VA business, do you have all your underlings track their hours by the minute?
By the second using Freshbooks.
Great article… and comments. I offer clients 3 options. Hourly, Retainer (which offers them a little discount) and Flat Rate depending on what type of work it is… for example, for a WordPress website from scratch, I might charge $799 for the first 6 pages, then retainer for any special add-ons. On my retainer package, I ask for 25% deposit, 65% within 3 weeks and the balance on delivery. Of course, this does depend on the project.
Jen
Thanks, Jen! I like your rate offering – it gives flexibility which is UBER important. I know other VAs offer what is called a rush job rate. This is another way to earn extra from your usual rate when a client needs something done quickly and out of your usual work schedule.
I am a new VA. I like all the ideas in the comments and the article was super helpful. One thing I am wondering is, what do you charge for a ‘Rush Rate’? I have done research on the going rate for VA’s and I am wondering what to charge as a new VA. Right now, I have it where clients can buy blocks of time.
Also, I got a transcription request and decided to go with charging per audio minute. However, in other countries, say…the Philippines, they charge an EXTREMELY low rate for transcription that I don’t see I can compete with. Any ideas?
I’ve done some research on contracts and I could really use some help finding a good one as well..
Thanks Reese!
Hey Alisehsa! Rush rates depend, but I usually charge my normal rate plus 25%. Don’t worry about what the overseas VAs are charging. People that use overseas VAs end up coming back to native English speakers.
Hi Reece – glad I found your advice. I am considering going virtual and doing some research before I start off. As Michelle Jacobs points out, you may have to be prepared to take someone to a small claims court, unfortunately but I can see that most clients are excellent, honest people. I think it is wise to get legal advice and possibly also the advice of a good accountant because you may need to deal with taxation, personal and business taxes, business expenses for your business etc. Is there a place where you advise about seeking professional advice about these things? Or are they just a matter of “write your own contract and keep your own books”?RJ LinkedIn http://uk.linkedin.com/in/ritajames/
Hello Reece, thank you for pointing out the pros and cons of both arrangements. The first few months in working with clients, I only offered retainer packages in increments of 5 hours. My initial retainer is 5 hours and goes up from there. I do not offer a retainer less than 5 hours so essentially I do not work with clients that just need 1-4 hours of service. With that being said…. I had all the cons you mentioned that come along with not instituting an expiration date. It was very hard for me to manage my workload if a client only delegated an hour of work within a given 30-day period. I did just this, each retainer package has a separate clause. If buying a 5-hour retainer; they had 30 days to use up the hours. This would keep up my billing. If they purchased a 10-15 hour retainer, they have 60 days, and so forth. My 15-20 hour retainers is 90 days. I based this on my current client activity and feel that it’s fair. It also helps me to manage my workload as opposed to never offering a expiration but also my clients feel that I’m working with them. The best of both worlds, I hope to continue this.
Michelle, this is a fantastic way to work. I believe that every business owner needs to find what works for them. It seems like you have found a great solution for you and your VA biz.
Reese,Awesome post.
When a client is approaching the end of their retainer package and is still requesting services, do you send them an email to kindly remind them that their retainer package is almost up?
Is there an easy way to track when clients are coming up to the end of their retainer?
Sarah!!! Yes, you let your clients know at the beginning of your working relationship that you will send them an email letting them know they have 5 hours left with their retainer (or you could do it when they get to 3 hours, whatever you choose). The way I do it is simple. I say “You have 5 hours left with your retainer plan. Attached you can find a breakdown of the hours I’ve worked. If you have any questions regarding the hours, just ask. Lastly, would you like me to send you an invoice for another X hours”. The way you track the hours with your retainer plans is with Freshbooks. They have a setting where you can enter in the amount of hours your client has paid and it will alert you when you’re getting close to that number. It works in percentages, 0% being the start of the retainer plan and 100% is the end.
I’ve been using FreshBooks for one month now. I LOVE reading that I can set up a retainer plan in their system!
I am currently doing an apprenticeship for an artist and am primarily booking & scheduling workshops to fill my clients Summer schedule. I spend about 10 hours weekly. What would be the best way to bill for my time calling venues & booking my clients calendar? Retainer? Hourly? Project? How would you handle charging for this type of work?
Hi, Hellen! My retainer is an hourly payment schedule but it’s paid up front. I track all of my time so my clients can see what I’m working on. It’s simple, transparent and clients love it. Use that.
Reese,
I am so glad I found you. I am learning a lot in a short amount of time. I am very confident that my VA business will be successful thanks to your transparency. It’s evident that you are passionate about your business. Your willingness to pour out your knowledge without hesitation is the reason why I know you are the go-to person that I choose to invest in to learn more about being successful as a VA. I am so excited about my future! I just want to say thank you for paving the way.
Sonja, I’m so happy you’re learning so much! I love how confident you are. GO GIRL! I am very passionate about my business and helping women like you reach your goals. I can’t wait to get to know you better and serve you in any way that I can. xo
Hi Reese,
Preparing to start my VA business. Should be launching shortly. Already have my first client lined up. I have to mention, kudos to you and the advice you offer. Nearly every time I Google a question I have regarding the biz, I always end up back on your site reading one of your articles/posts. The advice you offer is extremely helpful and has helped tremendously in prepping for my launch.
I’m still working on setting my pricing, but am thinking of the following:
– 4 Retainer Packages (Bronze, Silver, Gold, Platinum)
– Each retainer has hourly pricing with a set amount of hours. Each package increases in hours and hourly rate decreases
– If a client commits to the retainer, a minimum of one package is required to be purchased each month. Hours do not roll over for the first package purchased in a month. The client has the option to purchase additional packages in the month if the use all of their hours. Hours for additional packages purchased within the same month may roll over to the following month, although a package is still required to be purchased at the start of the following month. (Still have some considering on this one to see if it could screw me in any way)
– General hourly rate / Individual project (the highest rate) for clients not wanting to commit to a retainer package
– 50% deposit is due before project is begun. Remaining amount is due immediately upon completion of the project (within 3 business days)
– 10% late fee which increases to 30% after 30 days of no payment
– Rush Job Rate (thanks to your post, I decided to incorporate this)
– 50% increase of hourly rate
– Each request is subject to approval (if it’s not reasonable, I won’t accept it)
Let me know your thoughts on the pricing plan I am considering. If I should manipulate or improve it, please let me know!
Off topic – I highlighted something in this post to save to my notes for later reference and it gave me the option to tweet it. I LOVE that idea. How did you set that up? If you are using WP, is it a plugin? Please spread more wisdom!! =)
Thanks again!
Sorry, my indents didn’t take with the comment. Here is the pricing plan I’m considering:
1. 4 Retainer Packages (Bronze, Silver, Gold, Platinum)
– Each retainer has hourly pricing with a set amount of hours. Each package increases in hours and hourly rate decreases
– If a client commits to the retainer, a minimum of one package is required to be purchased each month. Hours do not roll over for the first package purchased in a month. The client has the option to purchase additional packages in the month if the use all of their hours. Hours for additional packages purchased within the same month may roll over to the following month, although a package is still required to be purchased at the start of the following month. (Still have some considering on this one to see if it could screw me in any way)
2. General hourly rate / Individual project (the highest rate) for clients not wanting to commit to a retainer package
– 50% deposit is due before project is begun. Remaining amount is due immediately upon completion of the project (within 3 business days)
– 10% late fee which increases to 30% after 30 days of no payment
3. Rush Job Rate (thanks to your post, I decided to incorporate this)
– 50% increase of hourly rate
– Each request is subject to approval (if it’s not reasonable, I won’t accept it)
Shantel, darling! Looks like you’ve covered it! I wasn’t clear with the 50% increase of hourly rate was connected to at the bottom, rush jobs? I am using a plug in called Sumo Me that allows you to highlight any text anywhere on my site that you can tweet out. Pretty cool! Thanks so much for all your kind words. Keep up the good work!