Minimum Fees and Why You Should Have One

Minimum fees are a necessary component of any profitable business. Let's explore what minimum fees are and why I believe you should always rely on them.

Put simply, minimum fees are the lowest price you’ll accept for a client to engage your services. If you charge by the hour I recommend that your minimum fee be equivalent to one day’s billings. If you charge per project, you could use this scenario too, using an internal hourly rate if you have one. Otherwise, you could set a minimum price based on the smallest typical project you accept. Don’t feel comfortable charging for a full day’s worth of work? Do a half day. But absolutely no less. The point here is to make your minimum fee a form of profit. Do not short change yourself. Otherwise, what’s the point of having one?

Here’s a scenario. Let’s say you’ve done your due diligence, looked at your financial reports and calculated your minimum fee. It amounts to $800, equal to one day’s billings. So, Mr. Great Client calls and needs a quote for a quick update to their website. $800. What about an image swap on that e-newsletter? $800. Uh, okay. How about making the logo bigger? $800.

That was easy.

Why have a minimum fee?

  1. It stops you from undercharging.
  2. It stops the client from asking for (and receiving) unprofitable service from you.
  3. It forces the client to determine if their “it’ll just take 15 minutes” project is worth it.
  4. You are seen as a busy, confident, valuable professional.
  5. Related to #3, it eliminates small projects that suck up time and energy.

I’m amazed at how the smallest projects can be the most painful and least profitable. With a minimum fee you can turn those nightmares into worthwhile endeavors that help the bottom line. We all get small, micro projects from time to time. It’s part of being a service-based business. But, there’s no reason why these small jobs can’t be valuable to your business. Use a minimum fee as a way to bring real value to your expertise and your precious time.

"Eric and I worked together on a number of projects at Archstone, and then AvalonBay. Eric is, without question, a top tier UI designer and developer. His attention to detail, rock solid HTML and CSS skills and ability to solve complex user interaction and usability problems with enhanced UI designs make him an asset to any web development project. I look forward to working with Eric on projects in the future and would recommend him to anyone seeking a UI/UX designer and developer."
Ryan Eckhardt, Partner, AvalonBay Communities

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