By offering Virtual Assistant packages you are paid for your expertise and NOT your time.
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Do You Know The Difference Between A Retainer And A Package?
One of the things that drive me crazy about the VA Industry is there are no standard definitions and terms. And… coming from both the IT and Project Management worlds, I love standards.
I see the use of retainers and packages being mixed and I believe it starts to cause some confusion, especially for those new to the industry.
So… Since I get asked frequently, “What’s the difference between a retainer, a package, and a project?” I decided to do a blog post all about it.
Here are my definitions for all of them – the same ones I used in my business.
- Are buckets of hours.
- Are billed prior to the work being started.
- Can be used for any tasks (they’re getting a blended rate… keep reading for more on this.)
- Must track your time.
- It has an expiration date.
- The client pays for your time.
A Retainer is a pre-paid bucket of hours that can be used for any tasks your clients need. The client dictates what the hours are used for and are paying for your time vs. your expertise.
Retainers are normally billed at the beginning of the month and have an expiration date of anywhere from 30 to 90 days from the invoice date.
Time is tracked on all the tasks completed against the retainer and the client is given a report showing how the hours were used.
Well… sometimes clients may question why it took so long to complete a specific task when they see your monthly report (especially if you do a number of different things for them).
It’s because they:
- Don’t understand how long it takes to do a specific task.
- Don’t know all the steps involved.
- Are looking at the time involved instead of the expertise.
- Bought your time, not your expertise.
And… for some reason time seems to be worth less than expertise. It’s a perception.
Now, retainers are great if you’re just getting started. They allow you to get a feel for how long it takes to do the work plus all the tasks involved.
They’re also great if you only do one type of work for a client (using only one expertise).
But… If you’re doing more than one thing, then you’re getting paid one flat rate for doing multiple types of work that could include several different types of expertise. This is known as a blended rate.
I know I don’t want to be paid the same rate I would charge for data entry if I were setting up campaigns in Infusionsoft. They require vastly different skills.
Infusionsoft is a beast and takes time to master… data entry is fairly simple and almost anyone can do it.
So… if you’re doing a variety of skills for clients and only charging them one rate, say $40 an hour, you’re leaving money on the table.
Sure you could charge different hourly rates for different skills but that’s a nightmare to track and manage.
A much easier way is to offer packages based on the expertise provided. This takes the time element out of it and clients have a much better understanding of what they’re getting for their money.
To recap, if you’re selling your time then it’s NOT a package, it’s a retainer and you’re tracking billable hours.
So, if you’re still reading, I’m guessing you’re interested in learning more about packages.
- Deliver a specific set of items or deliverables.
- Have a fixed price.
- Have a specific deadline.
- Don’t require you to track your time.
- Are invoiced 50% upfront and 50% on delivery (or you could invoice for the whole package upfront – your business so it’s your choice).
- The client pays for your expertise NOT your time.
A Package is a set of deliverables (tasks) based on expertise such as creating a WordPress website, implementing 1ShoppingCart, or sending out a monthly e-zine. Clients are paying you for specific expertise.
Packages are billed either all upfront or 50% prior to the start and then the remaining 50% on delivery.
They are for a fixed price and have a specific deadline.
Clients understand exactly what they’re getting and what they’re paying for.
Virtual Assistant Packages are based on expertise.
For some reason, there is a perception that people who charge by the hour get paid less than those that work with packages. I believe it’s because time seems less valuable than a specific expertise (even though we all know time is extremely valuable). Again… it’s a perception.
The beauty of packages is you can define them by your expertise AND control exactly what is included. If you have several different types of expertise, you can offer several different packages showcasing each and every one.
Or you can take one expertise and create several different packages for different audiences.
Voila… You now have multiple income streams!
Packages are the way to go if you want to work less and earn more!
Keep in mind you can package anything as long as you quantify all the pieces.
What do I mean?
Let’s say you want to create a package for email management.
You’d want to quantify the number of emails you would respond to in a specific amount of time.
- Up to 50 emails per day for $25.00 (example rate).
- Up to 100 emails a week for $75.00 (example rate).
- Up to 1,000 emails per month for $150.00 (example rate).
You may have noticed that I said “up to” instead of just a number. It just makes it easier if you only do say 40 in a week, it all works out in the averages.
Here’s another example…
- Say you create a package for monthly blog posts.
- Up to 4 blog posts per month (content provided by client):
- Proofing of each post
- Adding up to 2 images provided by the client
- Adding up to 5 keywords provided by the client
- Scheduling each post
- Sharing on 3 social media platforms using Buffer App
- Package Price is $300.00.
Your clients understand what they’re getting and for how much. It’s clear what expertise they’re paying for.
It’s very important to be as detailed as possible when putting together your packages. You don’t want any grey areas.
Oh and… You can’t package something you’ve never done before. You need to know all the tasks involved and how long it takes to complete it.
It’s essential for pricing and delivering your packages.
What About Package Pricing?
First… you need to know:
- All the tasks involved in the package.
- How long it takes to complete the package.
That’s why I mentioned you couldn’t package something you’ve never done.
Second, pricing is an art and a science.
It’s not about taking your hourly rate and multiplying it by the time it takes to complete the package. This is what many people teach.
The problem with that method is most Virtual Assistants don’t charge enough and it’s not about time, it’s about delivering expertise and value.
I can’t tell you what to charge… that’s why I say it’s an art and a science.
But… you can start with the hourly rate x amount of time and then add 25% to it.
For example – $30 x 45 hours = $1,350 + 25% = $1,687.50
Why 25%… it’s a place to start to add the value and expertise your package delivers.
But… you have to believe you’re worth and what you’re charging which is a whole different conversation.
Before you can put a price on any package you need to know how much you need to earn. That is the baseline number you should be starting with. (If you don’t know your baseline rate or are unsure of how to figure it out, I’d like to invite you to watch my YouTube video series on setting your rates. I used both retainers and packages in my business. Remember, your business – your choice. Do what works best for you and your clients.
Last but not least are projects.
Projects are very similar to packages but the major difference is who determines the scope (what’s included).
When you create a service package, you determine the scope of what is included in the package your client is buying.
For a project, the client determines the scope with your help. This is what Project Managers do – they work with their clients to determine what is included in the project and create the project scope.
That’s the biggest difference.
Packages you define the scope – Projects the clients define the scope.
The beauty of this industry is you can offer all three in your business – I did at one time!
Are you ready to create your Virtual Assistant Packages?
I’ve created a simple checklist that summarizes everything I talk about in this blog – feel free to download a copy if you’re interested. Just click the button below.
I’d love to hear from you.
Feel free to post below and let me know what action you’re taking today to create your service packages.
All comments and questions are welcome.
If you know someone who might benefit from this information, please share.
Thanks for reading – Susan