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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