183 - Outlining Your Payment Terms in Your Contract
Today's episode is part three of the Contact Series. If you missed the last two weeks, go back and check out the first two episodes in the series Five Ways Small Businesses Typically Taking Payments: 1. Hourly Payment - Most common along virtual assistants, coaches, consultants. If you have a no cancelation policy, you are better off charging a package price so you are still compensated for any hours you miss due to the client's no-show 2. Monthly - Conover with coaches, VAs, and even wedding planners. Monthly payments can be on a schedule, for example for a wedding planner let's say it's $12,000 you can say it's $1,000 a month that way if there is a cancelation you've still been paid for the months of work you did leading up to the event. 3. Flat fee per project - Common for graphic designers, web designers, creators who sell physical or digital goods. When you offer a flat fee per project you can split the payments into all the payment up-front, half up-front half after, or all after (which is not recommended). 4. Flat fee Retainer - Getting a deposit to guarantee a project and then taking the rest in installments 5. Percentage Retainer - Let's say your package is $4,000 and your retainer is $1000 you could say in your contract "Client agrees to pay a retainer equal to 25% of the full contract price in exchange for photographer holding the date for the client." I encourage people to use the percentage method so you don't have to edit numbers in your contract. You also need to consider that your cancelation/refund provisions will be based on your payment method. Go through your contact and take a moment to review all the contract provisions that are impacted by payment terms such as your cash flow.