The Best Way to Charge for Your Services

Many personal chefs are unsure how to best charge for their services.  Should they include groceries or shouldn’t they?  Should they get paid in advance or afterwards?  Should they charge a set fee or an hourly rate?

There is a lot to consider and while there is not an absolute right or wrong answer to these questions, I am going to argue the following…

Don’t Charge By the Hour

There are a number of really good reasons why you shouldn’t charge by the hour.  They are…

  • Clients will be more likely to question the time you spend to accomplish your task
  • Clients will never know exactly how much they are going to pay you each time you service them which can make budgeting for your service more difficult
  • You may hesitate to charge for all the hours you worked (this happens a lot!)
  • You aren’t being compensated for the value provided which goes way beyond what you are paid for your time
  • You aren’t being rewarded for doing a good job – as you become more efficient at what you do, you put in fewer hours and make less money and that doesn’t seem right, does it?
  • Charging by the hour makes it impossible for you to accurately bill your client upfront so that you get paid in advance for your services

From what I can tell, the main reason personal chefs charge by the hour is because they are unsure how long a task will take them to complete but figuring out the average hours it takes you to complete a service shouldn’t be that hard to do.  And once you know what that average is, charge something that will compensate you well even if your service takes more than the average amount of time to complete.

Include Grocery Costs

I’ve spoken and helped many personal chefs over the past couple of years and most of them say that the amount owed on their grocery bills doesn’t vary much.  So why charge separately for groceries?  Doing so creates extra administrative work, and you increase the likelihood that you will never get compensated for your food costs especially if a client ends the relationship before paying you for the groceries you purchased.  And this situation does happen.

Some of you may worry that if you do include groceries into your overall pricing that there may come a time when your client wants you to buy lots of costly, high-end, specialty foods.  If that does happen, view it as an exception and ask your client to compensate you a certain percentage more on a one-time basis to cover for the extra cost.

And since organic produce is more expensive than non-organic on a consistent basis, you may want to have a standard (less expensive), all-inclusive price for your non-organic option and a premium (more expensive), all-inclusive price for your organic option.

The client benefit of being charged an all-inclusive price is that they always know exactly how much they owe you week in and week out.  There are no surprises.

Get Paid in Advance

There is no reason you can’t get paid in advance for your service.  It becomes especially easy to do if you include grocery costs and set a regular (not hourly) price for your weekly service.

And consider being paid in advance for more than one cook day.  To give your clients incentive to do so, let them save x% off of your regular price if they pay for a set number of cook days in advance.  By doing so you both win.  Your client pays less for your service and you improve your cash flow.

The other advantage to being paid in advance is you won’t have to spend time chasing after clients to get paid.

Accept Credit Cards Not Checks or Cash

So few personal chefs accept credit cards, and I don’t really get it.  Some of them have said that they don’t accept credit cards because of the extra expense, but you can cover for the extra expense by including it into your all-inclusive pricing.  It’s not that much extra money.  It won’t make the difference between someone hiring you or not hiring you.

In addition, it makes your clients’ ability to pay you easier especially if you set them up so that their credit cards are billed automatically on a monthly basis.  Your clients won’t have to take the time to write checks or go to the bank to get cash.  The payment process will become smooth and automated.  What’s not to like about that?

And keep in mind that checks can bounce and if you wait until your check clears, you won’t be able to start servicing your client as quickly.

As for cash, it is harder to keep track of it unless you keep a cash receipts and payment journal either handwritten or electronically.  That’s a more labor intensive way to track the money you receive than if everything automatically appears on your credit card statement.

So what do you think?  Do you think you should get paid in advance by credit card and charge an all-inclusive price that is not dependent upon the hours you work?  Why or why not?

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Comments

  1. I’m in agreement with all of your ideas except including groceries. I offered an all-inclusive pricing option but abandoned it last year in favor of fee plus. Food prices have been so volatile, and the differences between organic, grass fed, free range, cage free, wild caught, whatever and standard market fare so divergent, the inclusive pricing simply wasn’t sustainable; it was eating into my income. In fact, it was becoming a bigger administrative chore and an irritant to my clients having to make frequent adjustments… much cleaner and easier just to pass along the grocery costs and let my clients take control of what they want to spend. Whether they want top of the line product or brown label stuff from a discounter, I get paid the same for my work.

    • Sandra Hoedemaker says:

      Thanks so much for sharing your experience, David! Yes, if you are finding that the food prices are extremely volatile separating out groceries makes a lot of sense so you don’t have to keep adjusting prices as you mention. However, if the biggest difference in grocery costs has more to do with standard groceries versus organic you could consider having a standard all inclusive price and a premium all inclusive price as mentioned in the post. Glad separating out the grocery costs is working better for you now.

  2. I have been charging fee-plus-grocery for over 12 years, and it’s been working just fine. I get paid every penny I earn, and reimbursed for every penny I spend, no problem.

    There’s nothing complicated about “This my fee, and here’s today’s receipt. Pay me.”

    (I keep a non-refundable retainer of a full session fee, which I allow them to use to pay for their last session.)

    • Sandra Hoedemaker says:

      Glad the fee plus grocery method is working well for you, Mrs. K. I like the idea of keeping a non-refundable retainer. That’s a smart idea.

  3. Sandra,
    I charge separately for groceries because the research I’ve done over the years shows that here in NJ if I include food cost into my fee then I would have to charge tax, or I would then be considered a caterer, which would change my business entity type…actually I can’t remember the exact reason, but knowing you are also in NJ I’m guessing I am wrong. If that’s the case your comments above could actually help me secure more clients, since I could just quote an actual price for the entire service, which a lot of potential clients ask for.

    • Sandra Hoedemaker says:

      Thanks for sharing your thoughts, Scott. You may be right regarding the tax. I am not an expert in local regulations and the tax implications. Perhaps check with a small business tax expert or accountant. See what they think.

  4. Robert Louis Brown says:

    You must also be psychic. I needed this kind of help. Thank you for the very helpful suggestiond.

  5. I tried the all inclusive fee with groceries and I hardly got any clients but once I started charging by the hour I seemed to have gained a little more pop in my business. I give each of my clients detailed information on why things take this long and if it’s something they want, they’ve all been willing to pay for it. In this rare occurrence it works.

    • Sandra Hoedemaker says:

      Love how this pricing topic is getting a lot of feedback! Thanks for adding your input to the conversation too, Kevin.

  6. I charge a fee plus groceries. I find that all of clients vary in what they want – some want all organic meal and veg, some don’t care, some want specific brand names, some want me to shop at specific grocery stores, some want all local, so I find it easier that way. I also require a non-refundable deposit before the cooking day, that I use to buy the groceries. I also find that e-transfer is a preferred way of payment for my clients. They do not have to worry about cheques or going to the bank for cash.

    • Sandra Hoedemaker says:

      Yes, Sarah, if you find that grocery costs vary a lot from client to client then fee plus groceries makes sense. Many of the personal chefs I have worked with or spoken to didn’t have such fluctuations in costs. I also like the idea of e-transfer. Thanks for sharing that option with everyone!

  7. Your advice was spot on! I have used these ideas in different business models with great success. The all inclusive concept is a proven technique to add value to your service and gives you a great opportunity to sell your services with a higher close rate. Your articles are a true blessing! Thank you!
    Chef B

    • Sandra Hoedemaker says:

      Thanks, Chef B, for the positive feedback and for sharing your personal experience using the concepts presented.

  8. jesseca jubirt says:

    Where would I get a cash receipts and payment journal just in case a client insists on paying cash?? Also, how much would you recommend I charge for each cook day?

    • Sandra Hoedemaker says:

      Hi Jesseca – You can search online for a cash receipts and payment journal. There are many to choose from. You could also set up a simple spreadsheet to keep track of things as well. Another option would be to purchase an electronic accounting program like Quickbooks. What you choose depends upon the simplicity of your business, your comfort level with addition and subtraction, and your preference. How much you should charge in particular is not as straight forward as giving you a number. Many factors should be considered before choosing a price. For instance – who are your ideal clients? How do you plan to position your service? What exactly do you plan to offer in terms of service? What do you need to make for your time so you feel as if you are charging what you are worth? How much do you need to make in order to have a sustainable business? I have a program called “How to Charge What You are Worth and Get It” that I’d be happy to tell you about if you think you’d have interest in getting support around the pricing topic. To schedule an initial free and no obligation “Price Right Discovery Session” with me visit https://www.timetrade.com/book/JNRRC.

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