Charging Fees for Services
Updated: Mar 27, 2023
If your small business is service-based, most likely you have considered charging a "fee" at some point throughout your business process. Often, service-based businesses charge customers fees based on their requests or if services don't work out.
Stack Strategies Co. fully supports small business owners to charge a fee because we understand the value of service-based businesses. When we create websites, we offer the option to build small business digital tools that help support and charge fees.
In this blog post, we're sharing the top fee options we often discuss with business owners to help guide our followers! If and when you decide to start charging fees, SS will be here to help!
Top Fee types
According to Investopedia, "a fee is a fixed price charged for a specific service. Fees are applied in a variety of ways such as costs, charges, commissions, and penalties. Fees are most commonly found in heavily transactional services and are paid in lieu of a wage or salary."
If you're comparing a fee versus a cost, a fee is applied during certain circumstances through the business process, for example, at the request stage or if there is a cancellation. A fee can or can not apply to the cost of the service/product, and this decision is at the discretion of the business owner. Suppose that you charge a request fee, but you apply the fee to the cost if the sale goes through.
Some more examples of fee types could include:
Request fee
Consultation fee
New client start-up fee
In-person versus virtual meeting fee
Additional time for service fee
Rescheduling fee
Cancellation fee
You can apply fees to most situations throughout your business, depending on its nature.
Who Should Charge Fees?
Based on our experience at Stack Strategies Co., we find most experienced business owners decide to implement fees for their services several years into their careers. We can only assume that this happens after business owners learn that providing excellent service takes time, and they want to maximize their profits based on their experience and knowledge. It makes sense, and most clients agree, experienced business owners deserve that extra incentive.
Often fees are considered when business owners are gaining a lot of interest, but not a lot of sales. Business owners will implement a fee to ensure that only serious leads ask for quotes instead of sending out quotes without earning a sale.
BUT WAIT, THERE'S MORE...
Additionally, based on our experience at Stack Strategies Co., we feel that business owners who are just starting off should consider fees from the beginning of their careers. Sometimes it is easier to calculate time and value into the business plan immediately and set the expectations with your clients across the board.
SS believes every business owner we meet deserves to make their dream salary while doing what they love. That is why we always support charging fees! Of course, we understand that not every business wants to charge fees and not everyone can, based on their location.
Considering Options for Fees
The way we see it, you have two options when it comes to fees. The first option is to keep the fee and apply it toward your business expenses! The second option is to retain the fee and apply it toward the final sale.
How do you decide? Personally, my nature is to try to be "fair" in business. I (Dezaree) feel that if you're putting in extra time, that you may not be compensated for, you should keep the fee. But, if the sale comes through, and you are profiting enough to cover time, knowledge, business expenses, and taxes, then sure, apply the fee to the booking.
Can you change your mind between both options? The best way to be sure that your business is covered with terms and conditions is to have different fees for different circumstances. For example, you can have a consultation fee that is applied toward the final sale, or kept if the sale doesn't go through. You can, also, have terms and conditions that if that sale exceeds the standard amount of service time, your business has the right to keep the fee for extra time spent.
We're going to discuss "starting to charge fees" next, but before we do, we just want to remind you that the best way to be confident in your fees is to have business terms and conditions written up with a legal representative. You can write the rulebook, but if someone needs to enforce the rulebook for you, you have to ensure your rules are legally allowed. Consider a fee structure, draft your ideas, and bring that to your consultation with a small business lawyer.
Starting to Charge Fees
Implementing fees in your business can be easily accomplished if you define a process and follow it thoroughly. If you're starting with one or two easy-to-understand-and-enforce fee types, it's easy to get started. If you're releasing a fee structure across the board for your business, you may have a couple more steps.
Here is a guide of 7 steps to follow when starting to charge fees...
Brainstorm fee ideas -- research small businesses similar to yours that charge fees if you need help! Document when you will charge in the process and how much you will charge for this fee.
Discuss your fee ideas with business colleagues or someone whose advice you trust.
Consider how you will charge fees -- see the fee tool section below. In this step, you'll need to decide on a tool to charge the fees and set the tools up for success.
Create a fee launch plan -- Decide on an upcoming date that you will start to charge fees. Consider communicating this upcoming change with your client database via email or social media. Add terms and conditions to your website and email signature.
Test your fee process -- Once you've planned to implement the fees, try following your business process as a customer. Or, ask someone you trust to try the process.
Consider a one-time discount for current clients -- To be generous, you can give your current clients a "one-time" pass on your service fee. But be sure to voice that "next time" the fee will apply.
Stick to your fees -- Once it is time to launch your fee, don't back down. Remember that you started this fee structure to only earn the business of clients who understand your value. Only work with those that do!
Fee Charging Tools
If you have decided to charge fees in your business, you may be wondering how to collect the money. Sure, cash only may be ideal, but it is less than realistic to collect the fee via cash.
SS is an expert in setting up digital tools to automate processes like this. We've helped set up over 100+ small businesses around the country. During our business-building experiences, we have learned a thing or two about these top tools.
Here are some details about our experiences with fee-charging tools...
1. Paypal -- While Paypal may be the top small business processor to start charging fees, we always encourage our clients to go a different route. PayPal charges fees, sometimes up the three times, during a transaction.
2. Chase for Business -- We've discussed how much we love Chase for Business (and if you get an account, be sure to connect with SS first so we both get a referral bonus!) This time we're promoting the fact that you can create credit card links to accept payments directly through your bank. Chase charges lesser fees than most processors!
3. Quickbooks -- Making the switch to Quickbooks for business can be a little costly for small businesses, but truly it comes in handy. The tools within QuickBooks allow you to create estimates and invoices plus manage your books for financial and tax purposes. Quickbooks is ideal if you're hoping to pay yourself as a contractor of your company or pay multiple people.
4. Emailmeforms -- To enforce terms and conditions, and have clients sign off on terms and conditions, we will recommend business owners to take advantage of EMF's build in payment tools. Having forms to support your business processes keeps the business process moving. It is no different when it comes to creating a form and payment process for fees.
5. Calendly -- If you charge a fee for appointments, one of the best ways is to use the appointment processor to charge the fee. Calendly deposits appointment fees directly into your bank account which avoids any percentage fees.
6. Wix -- If you have a Wix Website, fees could be charged via a "checkout" menu or appointment calendar similar to some of the other tools we have discussed.
How do you pick one tool? Stack Strategies Co. discusses digital tool options when creating a project proposal with business owners. Together, we discuss the advantages and disadvantages of a variety of tools based on what they have access to and what their goals are. We do our best to stick to the least amount of tools and additional costs as possible when it comes to managing.
Introducing the Fee to Clients
To launch your fees to your clients, SS strongly suggests creating some business assets to support your process. Here are some simple ideas to support the launch of your fees...
Document terms and conditions and link them on your website and email signature.
Create a fee menu on your website or on a flyer.
Write a letter on business letterhead that explains the value of your business.
Create a service brochure that defines your service, what's included, your fees, and your value.
Create an email template (in Microsoft or Google) to edit and send to your clients to obtain the fee when it is time.
By creating business assets like these, we find business owners are much more confident in explaining their fees and asking for additional sales.
To Fee or Not to Fee?
Most service-based small businesses charge fees in business industries across the globe. The most successful small businesses have a strong business plan that supports multiple streams of revenue that include business fees. While we may be in business to serve others and do what we love, we are in business to make a living.
Remember, anyone who doesn't see your value isn't your client.
The question of "to fee or not to fee" is 100% at the discretion of the business owner. Be assured Stack Strategies Co. is here to help business owners decide what to do and how to do it through our digital tool services. If we can be of any help, let's connect!
Now, let's go make some money! Have a great week.
Stack Strategies Co. is an online digital marketing company based in Cleveland, Ohio. Stack Strategies creates custom WIX websites, travel agent websites with Travefy, and email automations and digital tools on a variety of platforms! SS leads the way in small business marketing by sharing tips and tricks on our Behind the Strategies Marketing Blog. Connect with us on Facebook, Instagram, Pinterest, and Alignable for business-building inspiration. Or contact SS for your next project!
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