What You Need In Your Next Freelance Contract
December 18, 2014
I’ve talked to far too many freelancers who go into projects with only a verbal agreement and no written contract. The fact is, if you’re doing any type of client work, you need to have a solid contract to protect you and your client. While in a perfect world, all projects would go exactly as planned, they often hit road blocks in the real world. The best way to prevent these from happening, or at least make the best of them, is to have a thorough contract from the start.
Many freelancers, though, aren’t sure where to start when it comes time to put the terms of their project on paper. There are many different ways to structure a contract, depending on what works for you, what works for your client and what type of work you’re doing, but there are some basic elements that are an essential part of every contract.
This is what the rest of the contract and the project revolve around. A good contract needs to outline the scope of the project in detail, including your deliverables and your client’s deliverables, all with dates. It’s hard to be too detailed in this part of the contract, as you want to lay out exactly what you’re being hired to do. This should include everything from your labor to materials, hosting or any costs associated with the project that you’ll be passing to your client.
Are you building a website? Designing a logo? What exactly does this involve? Making this clear at the start helps keep everyone on the same page and keep projects on schedule. It also helps eliminate scope creep and keep projects within the original scope. For more about how to avoid scope creep, check out our post about keeping scope creep out of your projects.
Rate and Pricing
This one is, obviously, extremely important. After laying out the scope of work you’ll be doing, you need to associate a price with it. Pricing can be done a few different ways. The most common ways to price projects are with a flat fee or by hours.
A flat fee works pretty much exactly the way it sounds like: You charge your client a flat fee for the project that’s not attached to a certain number of hours or deliverables, only the project has a whole.
One good thing about this method is that if a project takes less time than you estimate, you end up making more per hour than you would if you charged hourly. The flip side of that, though, is that if a project takes longer than you estimate, you end up making less per hour. It’s especially important when charging a flat fee to estimate your time extremely carefully.
The other common pricing method is to charge by hours. With this method, you estimate hours for each milestone of the project, or the project as a whole, and establish an hourly rate that you’ll charge the client for each of those hours.
This method often involves tracking your hours and invoicing your client for the hours you actually spend on the project. Another way to do this is to estimate a certain number of hours and stick to that price unless you spend significantly more time on the project than you estimate, in which case you would bill the client for the extra work. The advantage here is that your client can see exactly where the cost of the project comes from. It’s also extremely important to be diligent with your estimation of hours with this method or you may risk souring the relationship with your client by exceeding your estimate by too much.
Now that you’ve laid out what you’ll doing and how much you’ll be charging, you need to state in your contract how you’ll be getting paid. There are many types of payment schedules, and all of them are the best type, depending on who you ask. The important thing is to find something that works for you, your client and the particular project you’re working on.
One way to handle your payment schedule is to charge a percentage up-front and charge the remaining balance either through multiple payments during the project or upon completion of the project. A common breakdown of this is charging half the cost up-front and the other half once the project is done. Another is charging a third of the cost upfront, a third halfway through the project, and the last third after completion of the project.
Another way to handle your payment schedule is to invoice your client regularly for your hours. This could be monthly, every two months or whatever schedule works best for you and your client. In this scenario, you simply list your hours, rate, additional costs and total balance on an invoice and send it to your client.
One provision that’s also helpful to add in this section is a late fee, which basically states that the client will owe you a percentage or flat fee for any payments received after a certain number of days (30 days is a common number to use).
In general, contracts start your projects off on the right foot and protect you throughout the project, no matter what happens. Contracts make sure that even if you wind up being up the creek, you’ll have a paddle.
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Revisions are something that many designers often overlook at the beginning of a project, but leaving this part out of your contract can come back to haunt you later. A revision is a a change to your design. This could be anything from changing a word or typeface to redesigning the whole thing.
Often times, changes are requested one or a few at a time. For instance, a client may ask for a different typeface, a new color for a certain element and photo to be larger. Then, after you’ve sent them the revised version (the revision), they send you an email that asks for a few more changes they forgot to point out before.
This can become a cycle and keep you making and sending changes over and over again, slowing down the project significantly. Defining how many revisions your client is allowed before a project starts helps encourage them to group all the changes they want together, knowing that they only have a set number of revisions. Most designers include two or three revisions maximum, then include the option to charge more for each revision after that. Any way that you want to handle it, make sure you’re clear on exactly what a revision is and how many you will do before you charge more.
Copyright and Reproduction
Anytime you’re dealing with creative work, ownership of the work and usage rights are in question. The best time to take care of issues surrounding these things is before it’s an issue.
A copyright establishes who owns and has the rights to reproduce the work. In most cases either the designer or client will own the copyright and give the other reproduction rights. A common setup for this is selling the copyright to your client and retaining reproduction rights for personal use. This will allow you to use the work in your portfolio, but not commercially, while the client owns the copyright for the work.
Another way this can work is you can retain the copyright and give your client certain reproduction rights, depending on what the projects is and what your client’s needs are.
Delay or Cancellation
Of all the sections in your contract, this one can be the biggest lifesaver. This part of your contract takes care of what happens if the project is delayed due to your client or cancelled for any reason. When starting a project, you or your client want the project to go perfectly and be on time. Unfortunately, things don’t always go perfectly in the real world, so it’s best to be prepared.
A good way to handle delays is by using the “pause clause.” This term was coined by Carl Smith of nGen Works and essentially states that if your client is late with their deliverables by a certain number of days, you can put the project on hold until you have what you need to resume it.
For cancellations, a “kill fee,” or cancellation fee, is good to have. For an hourly pricing model, the best way to handle this is state that if a project is cancelled, your client owes you for all the hours you’ve worked up to that point, plus a cancellation fee. For a flat-fee pricing model, a flat cancellation fee works, usually a percentage of the total fee.
No matter what type of project you’re working on next, these elements should be a part of your contract in some way or another.