Three Ways Your Clients Are Killing Your Profits

We had an interesting exchange with an outside website designer last week. He was doing some work on one of our client’s websites, which, in itself, is not that unusual. After we had given him the directions how to log into the website, he said he was unable to make the changes because he lacked the technical skills. We responded that we could help him for a fee, or he could find someone who knows what he or she was doing. It was a constructive, polite response. He answered in a rather snarky tone that he was disappointed we couldn’t help him.

I wonder how much of his design time he would like to give us for free. You see, we are in the business of selling our knowledge, skills and products, and if we give them away, we would not be in business very long.

profit or loss

My number one way clients kill profits is free consulting. We are usually very generous with sharing our knowledge, but when a client is trying to use our knowledge to solve his or her problem without paying, we are giving away profits.Watch Full Movie Online Streaming Online and Download

Another example of a profit-killing client is someone who has excessive changes on a project that is bid/proposed on a project cost. We make a lot of banners. They are a fairly simple and inexpensive form of signage. A clear, simple message is always best, so we tell clients that and then give a project quote.

Every once in a while, we’ll get a client that overthinks his or her banner. Change this; change that; move that there; let’s see what this color will look like; how about three more fonts?, and so on. We base a project price quote on what we call a “reasonable project” cost. When the client thinks of design time as an all-you-can-eat-buffet, the business can lose money on the project if it is not careful.

Excessive changes are another way for clients to kill your profits.

A third example is clients who needs excessive reminders, a letter or two and calls to settle accounts. Interestingly, we find both prosperous and barely-scraping-by clients who require excessive effort to collect past due amounts. I calculated that one client, a large, well-known service provider in town, took twenty minutes (four email, one call, and a letter) to collect on a small, $150 invoice. At our current billing rates, that’s more than $30 in lost billing time.

We all like to spend as little time as possible doing non-paying tasks. When a client takes you away from what pays the bills, you are losing revenue and profits

We have a saying in the office:

Everything has a cost.
Who will pay, the client or the business?

This is a simple way of looking at how you will allocate your time and resources, and, more importantly, how you will bill or monetize your time and resources. If you are giving away consulting advice, you are giving away money. If you let clients go over reasonable costs for a project, you are paying for the project, not your client. If your clients have excessive account costs, maybe it’s time to shift those costs to the client by adding late or financing fees.

In the end, all successful businesses have clients or customers pay the vast majority of costs. If your clients or customers have cost shifted too much to your business, you are simply giving away money.

Kona Impact | 329-6077