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Prepaid hours

I prefer to sell blocks of prepaid time when possible. I offer a $10.00 an hour discount on small blocks and more on larger amounts.

The advantages to me are obvious: I have my money. Both the client and I enjoy the benefit of not having to deal with multiple small invoices. I submit logs of time used against the time purchased, which has a side benefit of being able to find all related information in one place.

Yet, some clients just won't do this. In most cases, it's not that they object to paying the money, but rather that they can't seem to grasp the idea of deducting time from a banked amount. I don't know why that's so, but I've had one or two clients tell me they find it confusing.

I do set an expiration on prepaid time. If it's not used in a year, it's gone. I don't enforce that rigidly; if a customer runs a month or two over I don't care. I just don't want to have to track small left over hours forever.

Consider combining prepaid hours with retainers.

Prepaid time can be particularly valuable when your business is just starting as it dampen the wildly fluctuating income that often happens with a startup, but it's also useful long after those fluctuations are a thing of the past. However, many consultants I have recommended this to seem to think that it would be a "hard sell" to their clients. I have never found that to be the case at all - clients understand the advantage and like the discounts and the single invoice. As I offer it as a choice, not a requirement, it isn't anything they have to do, yet most of my clients do purchase these blocks. Try it with your customers; they probably will like it.


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