Advice To Freelancers: Sell Gift Cards

by Randy Murray on January 3, 2011

A friend and fellow freelancer asked me a question about retainers the other day.  I spent some time thinking about it before we talked. We discussed a strategy that I hope will work for him, and I think it might have value for others, too.

The first thing we discussed was my two rules of business:

  1. Take the customer’s money.
  2. Don’t give it back.

If you want to take their money (and keep taking it), you’ll need to give them great value. And value sometimes comes from giving them options for how they pay you.

I work with clients in a number of ways: hourly billing, fixed project rates, and retainers. It’s all fairly standard. If you retain me I guarantee a set number of hours of availability every month for a discounted rate. I also extend that discounted rate to the customer if they exceed the number of hours they retained me for. That’s a popular option and a win for us both: I get guaranteed income and an ongoing relationship with the client and they get my services at a discount.

But there’s another way that might work: sell your customers gift cards for your services.

A retainer is typically a monthly fee, but a gift card is a bulk purchase to be used at a later time. This may work for a customer who’s not ready to commit to a retainer, but who wants the benefits and the discounts that retainers provide. Some clients may find that they come in under budget for one project and must spend that money or lose it. A gift card might just work for that.

I’d recommend a few ground rules you should establish when you sell a gift card for your services:

  1. Set a dollar value on the card and define the number of hours of work that represents.
  2. Make it clear that your gift cards are non-refundable (see Rule #2 above).
  3. Establish lead times for project starts. Your customers aren’t paying for priority service; they’re paying for your hours. Ask them to give you at least a week’s notice on projects, maybe more, depending on your needs.
  4. Determine if the gift card must be used within any particular time frame. You can choose to set a “use it or lose it” deadline, or not, but be clear and up front when you sell the card if there are any restrictions.
  5. Put it all in writing.

There may be tax implications on your selling of gift cards. That will depend on where you live and the local laws. Consult your tax professional (if you’re a freelancer, you really need a tax professional to help on this and other questions).

Be creative and give your customers and clients options on how they can work with you and compensate you. And when you can, take their money!

 
LinkedInStumbleUponShare/Bookmark
The Advice To Freelancers: Sell Gift Cards by Randy Murray, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

{ 2 comments… read them below or add one }

Ian January 4, 2011 at 7:01 pm

Just one tip for those who would like to have an argument for prospective clients for retaining. After being self-employed for two or three years, I reviewed the past jobs I did and went to my top 3 clients and show them how much I had cost them for doing last minute and emergency jobs.

Not that I had mind the money but I thought it would be nice to get my nights and week-ends back and made offers of retaining for a trial period of 4 months to be extended if found agreeable. I had set the number of hours per month (in my case set days of the week/month) as well as other benefits which applied to my skill set for a set fee.

I used the trial period to work out the kinks and developed fix routines. Now 12 years later those 3 clients are still with me and its worked out great. I even get bonuses in the form of “vacation and sick leave” thus negating “no work — no money” as well as up to date software and hardware. They get a valued “employee” without all the hassles and paperwork. It’s not for everyone and trust is needed on both sides.

Ian

Reply

Randy Murray January 4, 2011 at 7:38 pm

Excellent tip, Ian. Thanks for sharing.

Reply

Leave a Comment

Previous post:

Next post: