Every section is a contract is important, but one of the most important is provisions covering payment. 0:00 Why do all this work if you can't get paid, right? 0:06 When freelancers submit project proposals, they often submit a quote along with it, as well. 0:09 Quotes serve an important purpose by detailing the costs of undertaking a project, 0:14 and a client's signature on it signifies that they agree to the price you are charging. 0:18 But that isn't a guarantee of payment and in your contract, 0:23 you can include provisions that protect you against different forms of sketchy payment tactics by your client. 0:26 Traditionally, most quotes only include pricing information, and with good reason. 0:33 You don't want to scare off your client with legal stuff on top of your prices, 0:37 but you should always include these provisions in your contract and make sure the client signs off on it. 0:41 Let's go over our main sections—fees and estimates. 0:46 Now, we covered this earlier when we talked about the project proposal, but let's go over it again. 0:50 This is the main purpose of the quote—to indicate how much you are charging for the project and how you arrived at this estimate. 0:55 If you're charging hourly, indicate the rate and the time you estimate per activity, as listed in the project proposal. 1:01 If for any reason, depending on your locality, you're going to be collecting taxes, indicate that, as well. 1:08 You may also want to state a time limit that these prices are valid in case the client holds you to it for future work. 1:15 Payment schedule—how will you be paid? 1:21 The biggest mistake you can make is to take a one-time payment on the completion of the project. 1:24 Break up the total payment into smaller scheduled payments across the life of the project. 1:29 Take a percentage up front when you've agreed to work on the project 1:34 and then schedule payments at the end of every phase or milestone, 1:38 or you can take 50% on signing of the contract and the rest on completion of the project. 1:41 Don't hand over any deliverables until you have received payment for it. 1:47 With small clients, that breakdown is probably overkill. 1:51 You could take a smaller percentage up front and then the rest on completion. 1:55 Only accept payment on completion from clients you really trust and have a very longstanding relationship with. 1:59 Make sure these terms of payment are pretty clear 2:06 and indicate the consequences of not paying you accordingly. 2:09 Some freelancers will communicate that work will not commence 2:12 until both the signed contract and the initial payment are received, 2:15 and that the site will not be launched until final payment has been delivered. 2:18 Others put the site up, but after a certain grace period, pull it down if no payment is received. 2:22 Then, there is payment terms. Explain your terms properly and cover your bases. 2:29 In the book, Pricing and Ethical Guidelines, the guys of the Graphic Artists Guild 2:34 point out that there is a big difference between payment 2:38 being required a certain number of days after the receipt of an invoice 2:41 and a certain number of days after the first use. 2:45 The latter can be delayed for many reasons outside the freelancer's control 2:48 and it may be quite a while before you get paid. 2:52 Mention how the client should pay you, as well— 2:55 whether by check, a bank transfer, online, or any other means—and who the payment should be addressed to. 2:58 These terms will cover your basic payment rights, 3:05 but there are still situations where the client can mess you up. 3:08 Let's see what could possibly happen and how we can protect ourselves. 3:11 In our first scenario, we have a lack of communication or if the client abandons the project. 3:15 Sometimes, clients can hire you, seem enthusiastic, pay your upfront costs, and then just disappear. 3:20 They're impossible to get in touch with, take forever to answer your emails, 3:27 and are absolutely no help in moving the project forward. 3:30 Time is money, and this is definitely time lost, so you need to cover your bases. 3:34 You can include an abandonment of project clause, 3:39 denoting that if the client fails to communicate within a certain number of days, 3:41 then the project is essentially deemed abandoned 3:46 and you have the right to bill your client for any services rendered thus far. 3:48 In our second scenario, the client is asking for more revisions than allowed. 3:52 Now, you are rarely ever going to complete a project where the client doesn't ask you to change something. 3:57 Revisions and alterations are part of the game. 4:02 Sometimes, revisions can be within the scope of the original work, 4:05 and should be considered part of the process. 4:08 Other times, the changes desires are beyond the original, agreed-upon scope of the project. 4:11 In such cases, you are well within your rights to charge the client for additional work. 4:16 These changes can be billed by your hourly rate, 4:21 or by a flat fee that is agreed-upon at the time of the change. 4:23 You should also specify what the course of action is if the client changes the project once it has started. 4:28 Is the client going to pay for all the additional expenses incurred, 4:34 and should they pay you for all the work already done, even if they aren't going to use it. 4:37 Lay it out in the contract. 4:41 In our third scenario, the client refuses to pay or takes too long. 4:44 Now, what happens if the client doesn't pay you on time? And how late is late? 4:48 Specify when you consider a payment overdue and what the penalty is. 4:52 There are a few incentives you can provide to make clients pay you on time. 4:57 You could charge a penalty fee for every block of time that the payment is overdue, 5:01 or you could offer a small discount if payments are received soon after the invoice has been issued. 5:05 Scenario 4 includes the client killing the project. 5:11 One of the biggest sources of frustration is when you spend weeks or months working on something and the client kills the project. 5:15 Protecting yourself from these kinds of situations 5:21 is one of the smartest things you can do as a freelancer. 5:24 Clearly lay out what happens when the project is killed, 5:27 that is, when the project is canceled for reasons outside your control. 5:30 Common charges are 25-50% if killed during the initial stages, 5:35 50% if killed after the initial stage, 5:39 and the full 100% if killed after project completion. 5:42 Now, sometimes the job can be canceled or rejected 5:46 because the final project didn't meet the client's expectations. 5:49 Regardless of what the client tells you, you should still be paid. 5:53 Industry standards for this are around 1/3 of the fee if canceled before completion 5:56 or anywhere between 50-100% for canceling after the project has been completed. 6:01 Your contract should provide clear and concise guidelines on what happens when the project is killed or canceled. 6:07 The client then knows what to expect and in the event that it happens, 6:14 you can negotiate payment accordingly. 6:18