Search
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Dashboard
>
Library
>
 

How to Deal with Last Minute Changes Overage

#
102
Chris Do
Published
November 20, 2019

Your discomfort around talking about money puts you into this position where people can take advantage of you. Chris Do helps us talk about money in easy tangible ways.

Read Transcript
I pin you I wonder what's. OK, so Lauren, you have a client that likes to make changes, right? Correct OK. And you said that no matter how many times you threaten to do something, nothing ever changes, right? Well, yeah, so it's a client that's going on for a couple of years now. They always have conference shows, so I do collateral for them, for the conference shows, and I try to plan it months in advance. And I never hear anything until like the last week before they have to go to print. And so I do charge them rush fees and they're always fine with that. But it was more of just like a professionalism question of is that actually a bad client, even though they're fine with the increased fees? no. Because how much do you charge your rush fees? What are what's the rate? Probably not enough. Well, I know the answer, right? But how much do you charge like in multiple like normal double? Yeah what would that be? Is that an hourly double? It is hourly, but I have since changed to more project based, but I have not put them on. OK, so if you do a project thing, so if you need to change it, it's going to cause this dollar amount. How much correct? How much is that usually or what you plan to charge? Um, probably still double of the project, which is. Um, crash wants you cheap with everything. But if it's a safe place to say these things, it's a safe place. Well, I was working with them as a freelancer before and since changed to a business, so I changed my my, my pricing structure and I'm still figuring that out. But I was, I mean, before I was $45 per hour, so I would charge them 90 90. Mm-hmm Where do you live? Right now in Indonesia, but I was living in Austin, Texas, at the time, ok? All right, and then if you were to do a project fee, what would you charge them for an overage? Honestly, probably only 50 percent, because I would mark up the project more comfortably than the hourly rate, so $1 amount, would that be? So hypothetically speaking. I'm trying to think back on what I charge them for, for a whole conference package, I think it was around 2,500 at the end of it. But again, that was with my rushed fee. So probably with the rush, it would be more 3,500 to 4,000. OK, Lauren. May I? Yes no, no, no, it's OK, it's OK. That's why you're here. And I'm here to help you. I'm going to try to drop my most nurturing tone right now. OK, may I have your permission to dive a little deeper into this? I can sense that there's some discomfort about talking about money. Yeah, Yeah. Absolutely OK. Because I don't want to go there. You're like, you don't do don't do that to me right now. OK that's why I don't want to say. Right, right. And I don't want to scare him anyway. If you guys have the next question like, no, I'm out of here, just hang up on this call and run away. All right. So here's the thing, and you're going to find out about this, especially if you want to tune in later today and listen to Blair and I talk about this stuff. But your discomfort around talking about money puts you into this position where people can take advantage of you. So what we have to do is we have to just get really comfortable talking about money. What's your favorite color? I don't have one. I like a lot of colors. How about your favorite typeface? You go to typeface. Do you have one right now? Probably even here. Even here. Perfect you see how you said that to me and you didn't really hesitate and there was no apologizing or anything about that. Yeah, that's a tone you want to have. OK OK. And if you can't feel safe here, boy, I need to do a better job because this is the place to feel safe to talk about money and don't worry too much. So here's the thing. Here's the thing that I know about this, even though you might feel a little uncomfortable saying, oh, I charge too little. $45 an hour, which it is too little, it might be double what somebody else in this group is getting. Mm-hmm So one of the things that we have to feel good about is just, hey, this is where I'm at tomorrow. I'll be better. And that's totally OK. We're on a journey, and nobody, at least from my point of view, is going to judge you inside this group. Mm-hmm OK, so we're going to feel comfortable with each other. OK, from here on forward, I'm going to help you. OK, so now it doesn't matter where you live. Let me just tell you outright right up. It doesn't matter what your cost of living is, it doesn't matter what it costs you to make something is what you need to do is to charge an international rate. OK as I understand, are you like an independent contractor? No, I just started a small agency, so I have about four people that I'm working. Oh, wow, OK, so do you do you work with locals or you work with international people? I my team is all indonesians, but all our clients are American or Canadian. OK, so what's the spread between what you charge and what you pay them? OK well, this is the first profitable month, so that was really good. What we charge, we mostly do WordPress development and we're still, I think, freelancer rates. So we do 3,000 to $10,000 for a WordPress website, which will be anywhere from 10 to 50 pages because we have big, annoying clients. OK, and then the cost to develop is significantly less my front end developer costs about $600 per month. OK, so what's like to do the same three to 10,000 website? What does it cost you to make? So if it's a 3,000 website, it will probably cost to make half of that 1% is your margin. Mm-hmm OK OK, so, so big, complicated websites should not be causing three to 10,000. I think you already know that and we're going to get you out of here. OK, so you have some existing clients that have known you for a really long time. And so you're kind of stuck with these old rates, right? Not well. This is where I get difficult, and that was where my phone call last week played in is I have people in America who are selling these projects for me and are marking me up 15% to 50% So you have salespeople, so you were like white labeled. I see. So typically, we fit within the client's budgets, but it's still higher than what I'm actually charging. I love this. So yeah, yeah, you see their bid. I do not. Do you ever ask for it? I do not. I just say what, I'm curious about it. Sometimes if I'm working directly with the client, then yes, but if I'm working with my sales guys, then they just do all that themselves. They ask you for a bid, you submit it and they do whatever they do, and they gives you the money, right? Correct I'll tell you something that this is fantastic news because you now know that you're at least 15 to 50 percent, at least under market value, at least now. Since you've never seen it, you have no way to verify this. Also, correct. OK so I'm curious why you're not that curious. This is really strange to me because I want to know. I don't want to know why, because it's the guy that's my sales guy, I've worked with him for 12 years. We've freelanced together and now he's kind of acting as representation in America for me, and I'm just kind of trusting him to do his thing, to get the clients. And then he trusts us to do all the project management and the development, right? So asking about the money isn't about trust at all, is it? Just curious. That's all. So do you think by asking him I'd like to see the budget and how he estimates the project that you feel like that's an expression of distrust? I don't think so, but I think my thing is more of what is the benefit of knowing his markup? Oh, so you can learn how to build your own projects in the future with your own clients. The relationship, you think it'll hurt the relationship. Perhaps because and I think this is why I'm very sensitive with pricing is because people get aggressive with me. And so I have raised my prices on him before, and he basically told me upfront, like, don't do this again. And so I definitely easily get bullied into lower prices and offering the same high quality results. We say that one more time. Yeah, because now you're digging, huh? I've been digging the whole time. Well, I've been dancing around it a little bit. You're a good dance partner. Thank you. But soon the song's going to end. You just need to let you know that, OK, we can only dance so long. You're going to quarter me. I know. Be cornered. Run straight to it. Let's run right to the corner. No, I well, it depends on how deep we do want to go. I want to go to the deepest. OK, that's fun. I struggle with codependency, and so part of. Not necessarily my value, but maybe it's hard to put my foot down and say, no, I am worth this much so. I've tried raising prices before, and he told me up front, just like, no. And it was small. It was $45 to $50 per hour, and he was like, please don't do this again. So I'm overly sensitive. What's his rationale? I don't know. I never cried. never asked. OK so I think I can have a really, really deep conversation with you, but since there are 54 people watching, this may not be the most comfortable thing for you. I'm comfortable with this kind of stuff, but I just don't want to drag you into those waters, ok? And let me try to do this in a way that is supportive. That doesn't put you into really strange, emotional state. Is that ok? Sure Yeah. OK so I like getting people, too, but I understand what's that. I don't mind getting uncomfortable. Oh, really? OK, well, everybody, fasten your seatbelts. I've been given permission. This is it. Oh my God. Yeah are you ready? Oh my god, OK. We're going to need like the five point harness here on this one seat belt or just a regular helmet on your helmet, your flame retardant suit and put in the harness. OK, because we're going to go there, I'm going to throttle it now. So here's how roll it now. OK, so so Lauren. Yes in the interest of time and all because I just feel like this clock ticking on me. Real bad, right? So I want to get real deep. So just take a deep breath. And let's just go there, ok? I'm just going to go there, ok? Usually when somebody says to me, like they have a hard time saying no, there is probably a parental figure that's dominated you for a really long time, and now you're just living out your childhood over and over again. Doomed to repeat this, it could be started with maybe your father or your mom or an older sibling. And then it continues on. And I don't know if you're in a relationship right now, but then, you know, are you in a relationship? I am in a relationship and it is a healthy relationship for the first time in 10 years. OK, so yeah, so you've learned something about the patterns of your behavior and who you accept into your life. So when what we need to do is what we need to do is we recognize when somebody is exhibiting these kind of signs and say they're not accountable for every other relationship in your life, but you need to be able to kind of recognize it and respond to it appropriately. OK so when somebody is being nasty and mean to you, I think you have one of two options in your mind. One is to fight or to just let them have their way. Is that about right? OK there is a third option, or actually there's a myriad of other options in between there. One that doesn't sound like I have to fight and one where I don't have to give up on myself. And it's really, really important. So if a client is being not kind to me, right, I have to just acknowledge that what am I feeling right now? I'm feeling like not valued. I'm feeling bullied. Even and where I go is I get really submissive and then I hate myself later. And I know that about myself, right? I'm speaking from experience right now. I'm not projecting onto you. I'm just saying, this is how I feel. Sure so through some therapy, I learned how to speak up and do some business coaching. I learned the language that I can use that feels comfortable for me. That doesn't feel like I have to fight you. Mm-hmm OK so there's always one thing that you can do if the conversation gets really uncomfortable, you should say I'm feeling really uncomfortable right now. I'm not sure how best I can proceed without getting emotional about this, so I suggest we just take a break. Is that ok? All right, so can you. Can you say something like that in the future? Mm-hmm Yeah, that's a really good punt. You know, you can punt. So I'm trying to help you with self awareness and mindfulness is that I'm feeling uncomfortable and that's OK for you to say. And none of this accuses the other person. So it's not a fight. Mm-hmm I'm feeling this way, so you use a lot of I statements. I don't know if I can continue without getting emotional. I'm not saying this is your fault right now, but I need to take a break. Mm-hmm And so then they get to decide, and a lot of people like, whoa, I didn't realize that in my language, I'm sending these signals to you, and most kind and reasonable people say, oh, I'm really so sorry. I'm really sorry. Let me just take a step back. Tell me what I said that made you feel uncomfortable. You can say, well, when I say I'm going to charge you this and you negate my worth by saying, don't ever do that again. That's where it gets really uncomfortable for me. Mm-hmm Because you're putting a limit on how much I value my own work. And I think based on the many people I've spoken to, I'm really undervalued in the marketplace right now. Mm-hmm And I don't want to think bad thoughts about that you're possibly taking advantage of me. I definitely don't want to go there again. OK, so if you've taken any of my communication courses, what we realized is this is that we're stressed out thinking about what it is that we want to say. So we think to say it is stressful, but it's actually the opposite to not say what you think is where the stress is coming from. Because once you say it, you're cleared. Right, so if there's a kid who's sitting behind you in the movie theater or on an airplane that's constantly kicking your chair forward and you're like, god, that's so annoying, it's so annoying. But I'm not going to say anything. You're all stressed out. Right, but if you actually stand up and say, hey, I'm so sorry. But when you kick that chair, it's really disrupting me and I'm just trying to get some rest. Would you mind stopping that behavior, please? And now you've said it. And if they keep doing it, then you just call a flight attendant over or you go out of theater and you tell whatever the guy who ushers you into the seat, it's like, you know, somebody is really interrupting my ability to enjoy this film or this flight. I've asked them very nicely and they've not. They've been nonresponsive. And then it's gone again. Have you have you worked with a coach or a therapist at all? Yes, back when I was in America did the co-dependency group, I had a life coach and I had a therapist at the time and then since then I've just been practicing it. OK, so there's a couple of things that we know when you work with somebody else as a subcontractor where your white label, they should make the most money because they're doing the hardest part, which is to get the work. I don't mean to say like, I'd like to see the bid. It's less out of trust than it is out of curiosity because I want to learn, how you're doing what you're doing. OK, now the fact that you are a little reluctant to ask because it's saying to you that you don't trust this person, it's because they've also created that feeling in you don't ever ask me those kind of questions, right? Whereas we work with subcontractors, anybody that wants to know, I just tell them if they charge me 200 thousand, I mark it up to a million. I just tell them I got nothing to hide and I don't want to start a relationship that one that's not transparent. Mm-hmm I just say, give me a fair bit on what it is, do you think this is going to cost? And then I will add whatever it is I need to add to run this project. OK OK, now when you're dealing with your own clients and you want to charge an overage and you don't want to do the work charging hourly, it's the worst way to get into a situation because I mean, until you start to get into stratosphere hourly rates, it's not enough to dissuade somebody to make a decision. You are, as far as I can tell, so affordable that they don't even care if you charge them like a whole brand new rate again. So let's just say you charge $3,000 to a website, right? And you're like, you know, you guys are making big changes for the hour. It's causing me a lot of stress and my team were scrambling to get the work done right. And I'm going to charge you another $3,000. OK they just signed the check. And if that happens, it's telling you your original price was way too low. Mm-hmm Right, so I imagine that for some of them, they were thinking they were going to pay $30,000 so they can change their mind 10 times before they get caught up to their budget. right. OK so I think you need to just start your baseline at 10k, so have you been practicing some of the price bracketing stuff we've been talking about? Very slowly in a way where I feel comfortable, Yes. OK, so you have a peak performance partner, Lauren. Yes, I do. OK, let's practice with them, practice over and over again until it becomes comfortable for you, OK, who's your peak performance partner? OK, Abby lemon. OK, perfect. She's a great peak performance partner to have. I think I need you guys to practice. I want you to start saying to get me to you, to your website for the kind of things that I know you need. It's going to be somewhere between 30 to 10,000. OK OK, I need you just practicing it over and over again until it becomes so comfortable with you. It's like saying avanir. Helvetica fruit digger. That's that's what I want you to be able to do. OK OK. What are you going to say? I didn't want to just. OK I think I've watched a video before of you answering this, and I don't know the answer, even after watching the video. My gut reaction to that is, well, if it only cost me 1,500 to make this, how is that necessarily ethical to charge four times, five times, 10 times as much? You have the ethical debate, huh? I do. I unfortunately too. OK Uh, OK, so you think what it costs to make has some relationship to the price that you charge the client, right? Is that right? I mean, that's what you're saying. Yes, let's take a position. Let's take a position here one way or the other. It's the middle ground, the murkiness that gets us all messed up because some days we feel like this and some days we feel like that. So we can't be consistent with ourselves because we don't know where we stand. You know, if you're a democrat, you're a Democrat. If you're Republican. Just be one. It doesn't really matter. So, and you just need to ask you right now, do you think what something costs has a relationship to what you pay for it cost to make? And should it be that way? Praying and knowing the. OK, so you don't. OK, so then there shouldn't be any issues with ethics, right? Because look, I charge clients at minimum 30,000 an hour to do a strategy session with me for one day's worth of work. And then you can say, well, where does the cost? How do you justify? Chris, I don't know. It's just a day of my time. What does it cost me? Well, I go to their office, so there's like $1.50 worth of gas. I show up. With markers and paper and sticky notes, and that has a cost, it's 50 bucks. $200 Let's just say I'm being generous here. And I bring an assistant with me usually, so he she has an hourly fee to me, I suppose, prorated for their salary. So how can I justify charging $30,000 for the strategy session? How would you do that? How would I do that? How can you help me justify that? Yeah help me. Don't that. Um, because you're Chris, and you're awesome. OK, well, thank you very much. You're awesome. You're offering more value than just anybody else that shows up with sticky notes. OK, so it's not based on the material costs of making it right, because we know that's not a lot. Right right. So I had this debate with somebody in Poland. So I asked them this. A lot of people have the same issue of ethics because they think it's unethical. And all you have to do is look into the real world outside of your own lens and your own life and look at how many things you buy that probably have no connection. To what it costs, like when you go to Disneyland, it's $120 a ticket for a day. Are you sitting there thinking really, Disney, it cost you that much to allow me to enjoy this experience? Whether it is one person here or 100,000 people, it still costs you that much. Really? not really. All you have to do is look at cars, clothing, even your cell phone that you use. You can look up the true costs of what an iPhone in terms of raw components and see if you're getting good value on that or not. So here's the debate. The debate is this who gets to determine the value of something the buyer or the seller? Who gets to determine the value, something the buyer, the seller to support your argument, the seller, the seller gets to decide the value. OK, great. Well, let's see. OK, so it's midnight here, by the way, but all day? Hang in there, ok? Yeah so there's a difference between price and value. OK there's a big, big difference in price and value, and people mix these two up all the time. So you, as the seller of creative services, gets get to determine what you get to determine the price. It's going to cost you $10,000 to do this website. That's the price I get to decide if that's a value for me, if I don't think it's valuable for me in terms of what I get, I don't buy. I see the value the buyer gets to determine the value period. So what you need to do is you need to help them understand the value and then therefore the price seems like a bargain. And you should do the work. OK so no matter what price you set, the buyer doesn't want to buy. They don't see the value. No problem. You can't force them to buy unless there's literally a gun to their head. They will not buy unless their life depends on it. They will not buy. So you get to set the price and they get to determine if it's valuable and when you're the buyer, you get to do the exact same thing. So I think there's a Dry Bar concept, you know, like women like to go and have the hair, I guess professionally styled and it's they just use a blow dryer. So it's called a dry bar, right? Now, that seems ridiculous to me. To sit-in a chair, you're going to pay somebody else 50 or 60 bucks to blow dry your hair, then I'm going to cut it. Mm-hmm but you get to determine that value, so. So that means that out of 100 people, only a certain percentage will see value in that. You see, even though the price is fixed. And so they do a fixed price and you get determine it's valuable for me, so all the customers see value in that and that's it. So this whole idea of ethics and surrounding you or anchoring yourself to what it costs to make is ridiculous. Has nothing to do with that whatsoever. You get to determine your price and somebody will determine it's fair for them. OK, by making sense to you right now, if not fire back, Yes. I need to put this issue on. OK, so here are some key takeaways for you. You need to practice through your peak performance partner Abby and talk about price. You need to drastically ratchet up your price. You really do you're undervalued in the marketplace, especially if it's 50 to 100 pages for us, a 50 to 100 page website is going to be at minimum 60 70 thousand, if not more. It's a lot of work. And then when you get to the overage point. Right, so you threatening to charge more has almost it's inconsequential amount because the original amount was. So low to begin with. OK and it's a pain in the butt, and you don't want to run in circles. You don't want to run in place. So doing work up to 90% and then having all changed the night before. You could just refuse to do it, or you can charge them $25,000 and they'll say, OK, we still want it done, and then you could be happy doing the work, think team. I'm super sorry about this, but we got to do the work. I'm going to give everybody a $500,500 bonus. Thank you. You could take better care of the people who work for you. Yeah and you can think about it like that, so some people have a hard time fighting for themselves, if you just imagine those four people who work for you. Those contractors take better care of them.

RELATED VIDEOS

Cultivating Client Relationships
Cultivating Client Relationships
Matthew Encina
March 1, 2021
How Do You Manage Client Approvals And Feedback
How Do You Manage Client Approvals And Feedback
Greg Gunn
December 31, 2017
Booking
Booking
Errol Gerson
January 25, 2021
Business Automation Q&A
Business Automation Q&A
Matthew Encina
April 30, 2021
Ask Me Anything: Dealing with Client Issues
Ask Me Anything: Dealing with Client Issues
TheFutur
April 30, 2017
How To Schedule A Project Timeline
How To Schedule A Project Timeline
TheFutur
May 12, 2019
thefutur.com
Upgrade your Membership

Join the digital community, find people to work with, jump in the live calls, and more! When you upgrade today, you will immediately get:

Everything you have now
Two monthly live group calls with Chris Do
Weekly Office Hours with experts
Access to the digital community
Exclusive job/project opportunities
Peer accountability partnerships
Everything you have now
$150
/month
Billed every three months
Upgrade For $449

Or get two months free by signing up for the year!