Hourly rate - client wants invoices from other companies to prove my rate


27

I am being asked by a client to provide invoices from other clients showing that I was paid the hourly rate that I want to charge them. In other words, Client A wants to see my invoices to Client B and Client C to prove that I got away with charging $N/hr.

This doesn't seem right to me. Should I do it, and what information should I keep away from them? If I protect my client's identities, they won't be able to verify the invoice is true, so this is just an exercise in paper-pushing, but if I do show the full invoice, then I'm compromising my client's privacy.

Business

asked Mar 26 '11 at 02:38
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Bob Baddeley
238 points
  • Thanks for the answers, all. The client says it's to justify the difference in rate between a current and a previous contract. They need to be able to justify to an auditor the difference in the rates. I've explained that it's because it's a different contract that requires different skills, and the new contract is on a much tighter schedule requiring that I make it a higher priority. They're allowing me to submit invoices with my client's identities hidden. – Bob Baddeley 7 years ago
  • You should charge additional flat $ rate for helping them with documents for their audit that would otherwise never be a part of your $N/hr contract work. – Amol 7 years ago
  • Your comment changes the question completely. – Jeff O 7 years ago
  • @Jeff, how does it? I thought I gave them a legitimate explanation for the difference in price, and regardless requesting invoices from me for my other clients seems wrong. – Bob Baddeley 7 years ago
  • Lots of good points. I was hoping to gauge whether this is a common practice. From the responses, clearly it is not. Some said that since I had a previous contract with a different rate, they are not being so outrageous to ask for justification, but on whom does this burden fall and to what extent? As some said, it's responsible for them to do their due diligence to get an estimate of fair market rate, but if so few people advertise their rates, that must be difficult. To ask for my invoices definitely seems to violate privacy and be unusual, and I appreciate the other perspectives. – Bob Baddeley 7 years ago
  • I feel like many of the below answers are populist, personally. Not saying that any of them are wrong, but none of them in the slightest convinces me about the proper direction to take were I in your shoes. Right now, every single one of the current top 4 answers is making an appeal to your ego, by asking rhetorical questions and by making strained analogies, it's not clear that you're getting dispassionate analysis. – Uticensis 7 years ago
  • If I worked for Client B or Client C then I may well regard the details of our financial transaction with you as commercially confidential information and might not be very happy that you shared it with someone else. I think there's an ethical issue right there: your contracts with customers should remain just between you and that customer. Which isn't to say you can't ask them to provide references to client A that they're happy with your work and value for money. – Rob M 7 years ago

11 Answers


36

ask him to share his YTD profit & cost of goods spreadsheet. When he answers "that's none of your business", you say "exactly".

answered Mar 26 '11 at 03:35
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Jim Galley
9,952 points
  • ha ha. Well said. – Ankur Jain 7 years ago
  • But real. I am consulting 10 years now and never had that request. I would tell the "client" in not so frank words to get lost. – Net Tecture 7 years ago

31

Translation to english: "I don't believe you're worth $X - can you prove to me someone actually paid you $X?"

You DO NOT WANT to work with a client like that. Any client who's audacious enough to say that to your face will make you jump through hoops before you'll see a nickel from him.

Unless you're hungry and must have this client - do that:

Be very blunt. Tell him your finances or business records are none of his damn business. If he walks, good for you. You just saved yourself a lot of future grief. If he backs down from his demand, he'll know his place and your relationship with him will be better.

answered Mar 26 '11 at 03:02
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Ron M.
4,224 points

14

RED FLAG. This is either:
(1) negotiation tactic if he does not trust you or he thinks "market rate" is lower
(2) he needs to show management because they don't believe him.
(3) indication that you are asking for more than budgeted (you're the odd guy) and maybe he needs it to prove this to his management to get you on board.
(4) he's fishing for information because he really does not know the market rate (worst case because he may or may not really want you)

As rude as it is... clients will ask. But also try to work it out with him because its unlikely that he's TRYING to be a jerk (at least I hope not for your sake!).

a) Ask him why he would like this? You need to know what's in his head.

b) Go ahead and tell him that this is an unusual request. Because it is!

c) If you feel uncomfortable about it - don't disclose it. If he really needs you - he'll pay what you ask him to pay.

Other things to consider: Does your old NDA govern your disclosure: If you have an NDA with the past client, then its fair to say that you have a non-disclosure that governs your client's privacy including contracts and other documents like invoices. Therefore - you are not in a position to release this information because it shares what they pay for services.

Explain that the rate is your current expectation based on market rate and your skills. Discussing it with your past clients is irrelevant. It's like going to the gas station and asking to pay last months prices. (Ha)

Ask if the disclosure of this confidential information required to get the job? If it is, and you're uncomfortable with it, then you should think twice about joining.

Last - tell him that you're an honest guy and your reputation is important. If he does not trust you, give him the opportunity to talk with your references.

answered Mar 26 '11 at 08:53
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User8942
156 points
  • +1 for the details and the angle on a possible NDA. – Laszlo G 7 years ago
  • I'm giving the points to this answer because it's the most PC. While the other ones are definitely good, this one doesn't assume the client is trying to be a jerk and offers some sensible solutions and explanations. – Bob Baddeley 7 years ago
  • +1 Its the 'pragmatic' answer for sure. Its a negotiating game, don't fly off the handle. Play along a little and see if it shuts them up. Give them the redacted invoices if you must, hold firm and see where it goes. If they play hard ball then work out if its worth bending a little on your rates. Of course if they are total jerks then you will find out soon enough and will be better off out. – Ryan 7 years ago

8

This is a red flag to me. Sounds like a client that is going to be a giant pain in your butt as long as you are working for them. I'd say no, and if that a deal-breaker for them then it might be a deal that's better when broken.

answered Mar 26 '11 at 02:44
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Adam Crossland
297 points

4

I'll agree with the other guys here that unless you're really hurting for money, the last thing you want is a client like this. Let somebody else who is more desperate than you handle him.

answered Mar 26 '11 at 03:19
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Kort Pleco
891 points

4

Just be respectful but firm with this potential client.

Tell them that 1) it's inappropriate to ask to see another clients bill 2) your quoted rates are reasonable and within industry ranges for your skillset and that if they feel differently they are free to look elsewere.

Unless you are dead desperate to pay your bills stick to your guns on the rates your charge. You know what your work is worth, as long as it's not crazy out of normal ranges you are better off not working for a client that would have the audacity to ask such a inappropriate question like seeing another clients bill.

answered Mar 26 '11 at 06:29
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Alan Barber
406 points

4

Now that we know they need the information for a third-party (auditor) and you've worked on a previous contract for a lower rate, this isn't so outrageous.

amol's comment about charging for the additional explanation is a good point. Creating additional documentaion for specs, quotes, project time-frames etc. are costly with no guarantee of getting the account. Even worse, they use the figures to negotiate with a competitor or used to do the job themselves.

At least they could pay something up front which you could deduct from the bill if they accept your quote.

answered Mar 26 '11 at 09:26
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Jeff O
6,169 points
  • +1 But if there is a previous working relationship, I would hate to jeopordize the future of the relationship over processing fees. They have not dismissed the higher rate, merely looking for some justification, and if a couple previous invoices along with highlighting the tighter, more immediate scheduling help cement that relationship, go with it. Value repeat business and it will value you back. – Justin C 7 years ago

2

And even if you are hurting for money, it's probably still best to walk away, or you're very likely to have the client from hell who finds every possible opportunity to shave off $10 here and $10 there... Oh that can't possibly have taken 2 hours, I'll pay one... etc.

And after giving you a brutal kicking for your bill, he'll no doubt ask for a discount, whilst making comments about how you must drive a top end BMW.

Walk away!

answered Mar 26 '11 at 05:49
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Matt
2,552 points

2

In my opinion it would be a breach of trust with your previous clients to provide this information. If I found out that someone I had contracted with had shared invoices they had sent me with another company I would never do business with that person again.

The price that you quote is either acceptable or not. How much you have charged other businesses is irrelevant.

answered Mar 26 '11 at 06:36
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Jim
21 points

1

I would suppose that you can explain them that your services are worth this rate. They should do their own homework and compare your prices with the competition.

That is a standard process because you could always present falsified invoices. They do not have the resources to check that. Moreover, such information should remain confidential. Even, if you had charged a different rate, that is not their business. It is a free economy and you can charge whatever you like to whomever you like.

However, your claim that the time-frame was tight, in comparison to previous work, is not solid. One could challenge this on the basis that you should claim more time on the project but the hourly rate should remain the same.

answered Mar 26 '11 at 08:42
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G24l
121 points
  • I think the timeframe being tight is valid, though, because in order to accomplish the job I have to delay other clients and jobs. In a sense, they're paying for high priority. This is common in just about any industry where you want something done ahead of other people. – Bob Baddeley 7 years ago
  • This is not hard argument and you might be beaten on that. – G24l 7 years ago

1

It is plainly unacceptable to provide information to this client that is commercially sensitive to other clients and especially yourself.

The market rate for a service is the price that is finally accepted between supplier and consumer. It's as simple as that. Business economics.

If you manage to strike a deal then the agreed rate was correct.
If you fail to strike a deal then the offered rate was incorrect.

I would word a proposal that indicates the reasons for the rate difference with other work done for them, and they can file it with your invoices for their auditor.

answered Mar 26 '11 at 14:54
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Dizzley
111 points

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