nVisionTEKBIM

Sign Contract Prior to Consultation?

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Hi all,

 

I'm wondering if any of you with your own businesses require your potential clients to sign a basic contract prior to a site visit or consultation? 

 

I have someone that is refusing to pay my invoice I just sent for meeting to discuss their project with them at their house. Prior to meeting in person, they viewed my electronic estimate / proposal (based on their design sketches) which had my service rates attached, which showed that I charge hourly + service fee for site visits and consultations. The person never signed the contract, which is fine since I'm not doing the job, but they feel because they didn't sign for the "entire job", that they don't have to pay me for my time meeting with them.

 

The invoice is only like $150, and I can let it go as a learning experience if they don't end up paying me. I have a Bachelors degree in Construction Management and have some construction management experience, so I have a general understanding of contract & construction law. Should I make all potential clients sign a contract just to meet and survey the project, even before I have the estimate/proposal for the actual project? Usually I meet to discuss their design and do measurements of the house getting remodeled, then prepare an accurate estimate/proposal with a contract for them to sign.

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I think you are going to be out $150. As they did not sign the proposal then nothing outlined in the proposal is valid. I believe if you are going to charge for a site visit & consultation then you need to make sure they know that this is not a freebie. A confirmed e-mail should be good enough for that and then if both parties agree to work together then you can have them sign your main project proposal/agreement.

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Better is to have a charge for an initial consultation which is paid before you visit the site. I'd write this particular session off as an "educational expense."

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Richard, would you suggest I make potential clients pay the service fee up front, then afterwards invoice for the hours (and mileage if applicable)? Some clients need me within a few days, so I couldn't wait for a check in the mail. That would need electronic payment. I normally receive payments as checks in the mail, and a couple clients pay by Venmo since that has no fees.

 

Do you also suggest having potential clients sign an agreement prior to any kind of site visit or meeting? I know some engineers have their contract directly on their website. I assumed clients would be turned off by that initially and find someone else that doesn't present the agreement until a little later.

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In the future, you can explain that your knowledge and ideas are your product.  Meeting to discuss the project is you being on the job.  Your mistake was showing up without them agreeing to this basic concept.

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Just have a flat fee for the consultation with an add-on for mileage, if you wish. You know what the mileage is going to be in advance. Get a payment by PayPal. You can give them a contract for your other services at the consultation.

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OR, have them sign the contract for site visit etc when you walk in the door

and collect the check before starting

 

spend 15 -30 min "visiting" to discuss the job and then the contract and services to be performed

then ask for signature and check before really getting into the "work"

 

I prefer to collect a retainer just like lawyers do

and then work off that balance till it gets low 

then ask for more

 

that way they never owe you 

 

Lew

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I just handle this with an email as Graham suggested.  I just basically let them know that any and all time I were to spend from here on out would be considered fully billable at the rates listed above/below.  Been doing it that way for quite some time now.

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I just don't trust their "word"

 

the last time I did I had to "eat" 4+ hrs

 

I emailed the contract - he agreed - then couldn't make it that night

 

I spent 4+ hrs so we could meet in the morning

 

he shows up - hasn't read the contract - was astonished that some tasks were not included

and wanted it "right away" even after my telling I couldn't start for another two weeks

 

he cops an attitude and I said bye

 

no money for me :(

 

Lew

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Most of us have probably been in that situation. Something very similar prompted me to implement a contract for all new clients. I include 1 initial meeting in my office for free, but I let them know that if I come to them or their site, the clock is running. There are very few people who won't pay you if they understand it's not a free service, however people are what they are. The same ones who would leave you hanging in a verbal arrangement will also create problems even if there's a contract. Your contract needs to consider what kind of steps you'll take if they don't pay all or part of your invoice. For example, do you collect enough of their information to be able to file a lien or lawsuit? And a contract needs to be worded amicably so they understand that conflict is not the norm.

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Just now, robdyck said:

Most of us have probably been in that situation. Something very similar prompted me to implement a contract for all new clients. I include 1 initial meeting in my office for free, but I let them know that if I come to them or their site, the clock is running. There are very few people who won't pay you if they understand it's not a free service, however people are what they are. The same ones who would leave you hanging in a verbal arrangement will also create problems even if there's a contract. Your contract needs to consider what kind of steps you'll take if they don't pay all or part of your invoice. For example, do you collect enough of their information to be able to file a lien or lawsuit? And a contract needs to be worded amicably so they understand that conflict is not the norm.

You make a great point about having enough info to file a lien or lawsuit. Early in my business I had to take a "druggie-type" client to court for dropping off the radar in the middle of a project and then canceling the project and refusing to pay. I took them to court and won, and got a lien (which I "think" I have, but not verification from the difficult county in that area). That was a learning experience from me to update my contract to give clients 3 business days to review provide feedback. Some clients still don't get back to me for much longer and I have to pester them to get the project completed.

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1 minute ago, nVisionTEKBIM said:

Some clients still don't get back to me for much longer and I have to pester them to get the project completed.

We need to remember that for some, the process of designing their home, especially when 3D is used, is play. For us it's work. I also include a "reactivation fee" for files that sit for longer than 3 months and I set out a clear # of revisions that are included in the fees. Eventually you just have to charge hourly. Customers hate paying those hourly fees. I could go on with some ridiculous stories....but I won't.

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Here is how I work:

 

I work in prepaid blocks of time. Once I receive payment, I schedule the time. They chose how much of my time they want to reserve (3-hour minimum). When I complete the time, I will give them back the plan file or they can purchase another block of time. They keep the time credit left over, if any, for future help. This method gives them the flexibility to hire me for the work they desire without a long-term commitment. There is no obligation for them to pay for additional blocks of time. I am very fair with my billable hours and do not charge for nonproductive time. I bill using PayPal and add the fee (rounded) to the invoice. 

 

Prepaid Hours Terms:
Design time is purchased in prepaid blocks of time (3-hour minimum). Design time is charged in ½-hour increments. Unused purchased design time can be used for up to 6 months after purchase. Design time is scheduled when payment is received. All payments are nonrefundable. PayPal fees, if applicable, are added to the invoice.

 

Payment Options: 
1) Email copy of front and back of check to Castlerock Designer Homes. No time delay.
2) Direct transfer to Charles Volz incoming transfers checking account # xxxxx (routing # xxxxx). Takes 3 or 4 business days.  This account is set up just for transfers.
3) Mail or deliver check or e-check to Castlerock Designer Homes. Delay depends on method.
4) Pay with PayPal (credit cards accepted). No time delay but adds fee.

 

I do not start any work other than an initial chat until I receive payment. 

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28 minutes ago, Alaskan_Son said:

I just handle this with an email as Graham suggested.  I just basically let them know that any and all time I were to spend from here on out would be considered fully billable at the rates listed above/below.  Been doing it that way for quite some time now.

So I have a separate document for my service rates and agreement, and attach them on my Freshbooks estimate / proposal for the client to review and e-sign to begin a project. Often I've emailed my service rates document early in new e-mail conversations just to get that info out to them. My Service Rates is 1 sheet with a summary of my rates and services offered, and my Agreement for Services is a 4 page document w/10 font that I feel includes everything that should be included. I originally had a lawyer review. I sometimes feel clients may be turned off by contracts too early in the process, so I don't give them that until I give them the proposal to sign electronically.

 

Would you email both the service rates AND agreement to a new customer as soon as they contact you to discuss their job? 

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That may be best done by 'feel'. I typically don't send out my contract too 'willie-nillie', but I'll mention quickly that I have a 'letter of agreement' to fill out before I start working. Same thing with fees. I don't like sending my fee schedule out. I hold one initial meeting where they talk about their vision, plan, and so-on. I note the spec's and provide an estimate based on my fee schedule. My fees are quite itemized so some items related to particular architectural features, or structural requirements, or controlled developments, might not be readily apparent, but rather evolve with the design. I send the agreement and estimate together noting that work will commence upon return of the signed agreement and the retainer fee, if required.

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Whenever possible. I like to estimate as realsitically a possible, and err on the high side. Nothing makes a customer happier than an invoice that is lower than the estimate.

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7 minutes ago, robdyck said:

We need to remember that for some, the process of designing their home, especially when 3D is used, is play. For us it's work. I also include a "reactivation fee" for files that sit for longer than 3 months and I set out a clear # of revisions that are included in the fees. Eventually you just have to charge hourly. Customers hate paying those hourly fees. I could go on with some ridiculous stories....but I won't.

When you charge a reactivation fee, are those for your projects that the client paused or ignored you in the middle of your work? I had a project before Christmas that I had to pester the client to give me their remaining Kitchen/bath design layout so I could finally finish the new construction project. I had a deposit, but finished 98% of the work. I invoiced for the remaining 48% of work I did since the deposit and said I would finish the remaining 2% once I get that info. I got paid and haven't heard back about the remaining info. So I'm sure they had enough to build the cabin with what I provided them. The client obviously did not read my contract stating no more than 3 days to review and get back. It was over a month.

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2 minutes ago, robdyck said:

That may be best done by 'feel'. I typically don't send out my contract too 'willie-nillie', but I'll mention quickly that I have a 'letter of agreement' to fill out before I start working. Same thing with fees. I don't like sending my fee schedule out. I hold one initial meeting where they talk about their vision, plan, and so-on. I note the spec's and provide an estimate based on my fee schedule. My fees are quite itemized so some items related to particular architectural features, or structural requirements, or controlled developments, might not be readily apparent, but rather evolve with the design. I send the agreement and estimate together noting that work will commence upon return of the signed agreement and the retainer fee, if required.

I totally agree with you about not giving the agreement stuff too early. The problem is I charge for any kind of meeting, other than a phone conversation. I don't always have to meet in person for projects, but when I do, I'll gather the info and any measurements and afterwards deliver a proposal with agreement to e-sign. My initial meeting or site visit is hourly without any signature of agreement. I'm starting to consider making all potential clients sign an agreement before I go meet and do any kind of field work.

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My experience has shown the reactivation is helpful to spur those who are a bit laggard in replying or getting back with their notes, changes, etc.

It's also helpful for someone who is perhaps taking a file to a consultation stage initially to explore the viability of their proposed development, like infill housing, or a unique project that may require applying for a 'variance' from the permitting officials. Sometimes it's to do a preliminary consultation on the cost.

If you have a new version of your applicable building code or drafting software released while someone is sitting on the fence, your time and costs may need to increase.

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1 minute ago, nVisionTEKBIM said:

My initial meeting or site visit is hourly without any signature of agreement. I'm starting to consider making all potential clients sign an agreement before I go meet and do any kind of field work.

I certainly would not perform any field measuring for free, and I won't travel to a site for free any more.

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It's different if you're bidding on a job to provide your services. If you don't shoot, you won't score!

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1 minute ago, robdyck said:

My experience has shown the reactivation is helpful to spur those who are a bit laggard in replying or getting back with their notes, changes, etc.

It's also helpful for someone who is perhaps taking a file to a consultation stage initially to explore the viability of their proposed development, like infill housing, or a unique project that may require applying for a 'variance' from the permitting officials. Sometimes it's to do a preliminary consultation on the cost.

If you have a new version of your applicable building code or drafting software released while someone is sitting on the fence, your time and costs may need to increase.

That is very wise, and I will implement that into my agreement. So thanks for your input on my post! There are times where builders will have me quickly print off the drawings early in the project so they can get pricing. That can take a month or so, and of course I have to sit and wait to finish the project. Even though I state 3-days max to review and provide feedback, the pricing set is another story that needs to be considered in my contract. I like how you stated you do yours.

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Don't get me started on builders prematurely estimating! You gotta protect yourself here too. Notes on the plans to let trades suppliers know just how dumb it is and that they'll have to redo all their estimating once the plans are finalized.

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15 minutes ago, robdyck said:

Don't get me started on builders prematurely estimating! You gotta protect yourself here too. Notes on the plans to let trades suppliers know just how dumb it is and that they'll have to redo all their estimating once the plans are finalized.

Haha Yeah I've had a builder be in a rush to have me print of the drawings so they can get pricing, even though so many items are in process and look in correct. Then they would question me why things don't look right. This also goes for some old-fashioned non-tech savvy architects. You can't pull a "snapshot" in the middle of a project and wonder why it's not a finished product.

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Yeah I've had a builder be in a rush 

 

I sent a DRAFT of the plans for his review and he dashed off and had $285 worth of copies printed

and tried submitting to permit office - there were a zillion errors since we only worked on the framing pages

since he was late due to having back surgery - then he's mad at me for wasting time and print cost

 

now he hires us to clean-up all of the pages - I hand-deliver a DRAFT and he tells his secretary to send to printer

I go whoa - those are drafts you need to review them first

 

after that I added a clause to my contract that by printing the plans the builder had reviewed them and considered them acceptable

 

Lew

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