March 21, 2019 Last updated March 15th, 2019 354 Reads share

What to Look for in a Service Contract to Get the Best Value and Protect Your Business

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Many small businesses and individuals are not used to signing service contracts. After all, how often does a chip wagon or hair salon require a marketing consultant or graphic designer?

But, sooner or later, every business does need to outsource a service. Often, services are delivered without contracts. There are pros and cons to this.

Work with invoices instead?

It might be just as easy to work with invoices, rather than full-fledged contracts, if:

  • service is simple enough
  • if service costs very little
  • if you are paying an hourly rate and watching the progress as you go
  • if the service is standard and all the terms are listed on the company’s website

As long as both parties are happy, and payments are being tracked and documented for tax purposes, an invoice can serve as enough of a paper trail.

But some services are more complex. There might even be “deliverables” and “milestones” and other parties involved. Some cost several thousand dollars and are paid by the project; it’s important to nail down what you’ll be getting for that money because your expectations and the supplier’s intentions might not be the same.

Many times, I’ve seen the client surprised that something wasn’t included, despite that very something never having been discussed. So make sure to discuss everything possible and get down in writing anything that is critical.

Custom work might need a contract

Keep in mind that a lot of work is custom, and custom work doesn’t always have standard terms and expectations. It’s not like buying more hot dog buns or shampoo, where you know what you get based on past experience.

No two writing jobs or design jobs or marketing jobs are the same. Translation is typically on a per-word basis, and that is simple enough. Accounting and bookkeeping might be the same year after year, but even those can change as laws change and as your business grows. However, like financial advisors, these are often paid for by the hour, anyway.

Still, accounting and bookkeeping can often be handled by invoices. However, here are four areas you might consider for a service contract:

  • Web development
  • Writing
  • Marketing
  • Design

 

Unless you are buying augh! – the pre-conceived template of a website with pretty much no customization, it’s not a bad idea to work with a contract. You’ll want in writing a list of exactly what is covered and exactly how much you’ll pay. If the total payment is not confirmed, you will want a very clear explanation of how cost overruns would be approved and calculated.

You could get by with a detailed invoice, but if you pay ahead and there is any uncertainty of costs or options, you’ll want a contract.

Are revisions covered?

That is one of the problems with some of these services. Even when expectations are clearly defined, clients often change their minds part-way through. Unlike accounting and translation, which are pretty straightforward, design and writing are not.

Once they see their vision in pictures or words, they might change their minds.

Or they get new ideas.

Or they want something added that they didn’t think of before.

Sometimes changes are included in the price, but sometimes they are not. Some changes are small, whereas others can be quite substantial. A contract makes it easier to determine what is covered than an invoice does.

Therefore, a contract might also cover revisions.

If there is creative work involved, you definitely should get a contract. If the development company will also be creating your logo or the web copy or original artwork, get the copyright formalized in a contract.

Here’s a checklist of items to include in a web development contract.

Conditions for a writing contract are similar. However, the situation is less complex. Although writing is often less templated, and therefore more custom, it also has a fewer moving part. Once again, a contract is absolutely necessary to establish copyright. For a book or a screenplay, for example, that is vital. However, for a first-person article or for editing or a news release, there are no copyright issues.

Whether you work with a contract or not, you’ll want to get in writing some of the same items for writing as for web development:

  • cost
  • revisions
  • timeframe
  • deliverables

Specify a timeframe

In addition to the cost and the deliverables, you should get a timeframe, whether in a contract or an invoice. Time is money, and if a one-month development project drags on for three or four months, that costs you money.

Because it is custom work, you might not want to constrain delivery to a specific date.  After all, if the project is too rushed, you lose.

But you might want to offer a reward for early delivery and demand a discount for late delivery. And you might ask for a weekly progress report to make sure that the project remains on schedule. Just because you outsource, doesn’t mean it’s not your project. Be careful not to be a backseat driver, but weekly reports are not too much to ask.

The contract for privacy or confidentiality

You are also more likely to need a contract to establish confidentiality and privacy in a writing contract – especially a ghostwriting contract – than in a web development contract.

Here’s a good review of what to look for in a ghostwriting contract.

Complex contracts

Marketing contracts can get very complicated because marketing can be very complicated.

You might buy a very specific service. It might even be a “package”, such as advertising in a sports program or a monthly blog promotion subscription. Those are simple.

But a complete strategy is complex. It can have more moving parts than a locomotive. Therefore, you almost always want a contract for marketing services.

The bottom line is this. The higher the value of the service and the more complex, and when you pay by the project, the more important it is to have a contract in place. Simple, low-value services and those where you pay by the hour can be handled by a detailed invoice.

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David Leonhardt

David Leonhardt

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