Pricing: The Good Burger Van
This example comes from Sara @ Officebird who used it as an analogy to explain why she uses all inclusive pricing in her virtual assistant business. We think it’s excellent and thought it was worth putting on the main site:
Imagine this: you are walking through town, feeling a little peckish, and you spot a burger van with a big sign outside it saying “Burgers £1”. Ah-ha! Perfect.
(Thinking “What the heck has Caroline had for lunch if she’s wittering about burgers??!” Read on my friend, read on….)
So you go over and order a burger. The girl starts cooking it, and you wait. After a few moments, she asks you “It’s a burger, right?” and checks with her colleague about how to turn the grill on. Another five minutes later she asks the colleague where the cheese is. Your stomach continues to rumble. As she assembles the burger, she announces “Oh we don’t have any lettuce, hang on” and pops into the Co-op to get some… Your stomach growls.
Anyway after about 15 minutes your burger is presented to you – it’s perfect in every way, piled high with onions, cheese, salad, smothered in ketchup and a soft sesame bun wrapped in a pretty gingham napkin. You hand over your £1.
“Oh no, the burger is £1. The bun is 50p, the salad is 20p, the onions are £1, sauce 10p, the napkin is 15p and my time was 15 minutes so that’s £1.50 – so the total is £4.45.”
Shocking – especially since there’s another burger bar across the road serving up burgers with the works for £3.
Now think about your own pricing – what’s included? Do you charge extra for phone calls or envelopes or printing? Do you snag clients with a low hourly rate, only to spend double the amount of time on a project than it would normally take an experienced VA?
Which burger van are you? Is your pricing clear to clients?
What a great post, I have recently changed my pricing to reflect client trends and what I am being asked.
I used to have a flat hourly rate for all work and this is still the case to some extent with the exception of transcription. I have been getting asked more and more for what I would charge per audio minute when I used to say I don’t charge per audio minute but I do charge hourly based on the amount of time it takes, I was starting to lose clients as they wanted to know the price up front.
So as of 1st August I now have one hourly rate for all admin work this will include paper, envelopes and printing however postage will be additional. I then have a per audio minute rate for transcription so client will know up front how much it will cost to have their piece of work transcribed.
Good stuff Charlotte – and hopefully it will also mean a consistent level of profit for you as well since you’ve budgeted for those costs in the rate.
Yeeesss…….but just because as VA chooses to charge an hourly rate and extra for expenses (at cost I might add), doesn’t mean that they will charge a lower hourly rate and deliver shoddy ‘goods’ or service. I believe it’s a case of ‘horses for courses’. So long as the client’s expectations are managed i.e. they understand up front how they will be charged i.e. no hidden costs, it’s down to the individual how they choose to bill.
Indeed there’s something to be said for being transparent in your charging, so client’s can see how much they have spent on the actual work/time and how much has gone into stationery costs etc – this may even be a requirement from their accounts and budgeting point of view.
That’s a good point Alexandra – but I’m sure you advertise what it will cost your client in total for a job rather than just presenting them with a final bill with all the extras added on? As a client myself I always want to know what the overall cost will be, rather than the “how long is a piece of string” discussion. Because VA jobs can be costed pretty accurately given a sample of work and a full client brief.
I always give a total of how much it will be, sometimes these things are hard to work out and it could mean losing a few hours work here or there. What I feel matters more is delivering a service to be proud of, at the price quoted, and return business. I only have one client who likes to work on an hourly rate and I always contact him when the billing hits increments of £50 to let him know what his costs are likely to be come the end of the month, it is then his choice whether to give me more work or to ease off for a bit. I’ve always loved this analagy, ever since it was posted on the forum and I haven’t seen a better one since! 🙂
I recently did some work for someone and firstly told her my hourly rate, which she was happy with. I told her that I could give her a better estimate of the actual cost once I had seen exactly what she wanted me to do – so I gave her the estimate, which she was also happy with. It turned out that there were a couple of problems at her end, which meant the time would increase. So I told her and also picked up on something else – an error on her part, which she was really pleased that I noticed and told her that this would obviously mean extra time. I have found that even if I give an estimate and a problem is encountered, so long as you tell the client as soon as you find it they are happy to pay the extra. I think the golden rule is to keep lines of communication open and tell clients at the outset that if you give an estimate and if you think it will be exceeded you will tell them straightaway and try to give an indication of how much extra there will be to pay. They appreciate you more for being straight with them about it rather than producing a huge bill at the end of the job.
Hi Caroline,
You state in one comment above: “Because VA jobs can be costed pretty accurately given a sample of work and a full client brief.”
I’m not sure that you can speak for all virtual assistants without knowing what each and everyone of us does and how they work for their clients. 🙂
For example, how do you know beforehand how many phone calls you will be making on a research job, or how many international calls you’ll need to make before you get your client an interview with a high-ranking EU official?
I’ve been a freelance secretary/editorial assistant (aka virtual assistant) for ten years now, and I wouldn’t quote for any job without adding the following caveat: All expenses incurred on behalf of the client, such as outgoing call costs, postage, stationery, consumables, etc, will be charged at cost.
The last thing I want to happen is be out of pocket on completion of a job.
I believe that making the client aware that additional costs may be incurred to carry out a job efficiently and succesfully is essential, and any reasonable business/individual will accept that.
I do, of course, agree that adding costs on top of a quote without making your client aware of your T&Cs before they hire you is definitely not good business practice.
Cheers,
Tracy
Hi Tracy
In that specific example, our calling package includes flat rate outbound calls both national/international so it would be included in our hourly rate. I honestly can’t think of a single instance where I’ve had to go back and ask for something on top of our hourly rate because it’s my job to include that in my calculations.
I will say that we’ve had instances where a job has taken longer than anticipated because either the client has supplied us something different to what was briefed or where the work is simply more time consuming than we first realised (like say getting hold of a specific job position within a company). In that case we’d go back to the client when we realised it was taking longer than we quoted and let them make the decision about it. A lot of the time the client tells us to go ahead anyway because they just need the task done.
The issue specifically is when people aren’t working out their hourly rate properly and then whacking extra things on the bill which the client isn’t expecting. Like in the burger example, you’d be really very peeved! I agree the most important thing is that expectations are managed from the start.