Prepaying a budget for fixed-fee services?

Greg HigginsGreg Higgins VP, Professional Services & SupportMember | Enthusiast ✭

I have a fixed fee services question for the group. If you offer fixed fee services, do you let your clients pre-purchase a budget in advance? We have a fixed fee services menu and a client that wants to use leftover 2020 budget to pre-pay for $20,000 in Creative & Educational services to be called upon ad-hoc in CY ’21.

Would you recommend facilitating something like this?

If you do do anything like this, would you be able to share any of the following:

  • Who on your team owns the budget throughout the year and keeping track of what was delivered? Would it be the CSM/Account Manager, a resource on the services delivery team or someone else?
  • How do you recognize the revenue? As the services are delivered or $20K evenly across 12 months?
  • How do you in-take the service requests (since they're not triggered by an SOW closed won)?
  • If you use a PSA, would you setup a program to oversee the individual projects?

Thank you!

Answers

  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    We do this for our largest customer, but they are only able to carry over hours for six months. The client manager includes how many hours have been used and what they have been used for in their monthly reports. I will have to look into the revenue recognition on this. I suspect we should recognize the revenue based on the number of hours used each month, and if the hours expire (which has not happened) then they would be recognized on expiration.

    We generally do track each piece of work as a project and manage as such.

  • Steve TennantSteve Tennant Managing Director Member | Enthusiast ✭

    @Greg Higgins Yes, I would recommend creating the opportunity and closing it as a SOW, Service Order, or whatever contracting vehicle you use for these services.

    It would count as a Service Booking and that would add to your backlog. Revenue recognition would be consistent with how you recognize revenue for this service for other clients using that service, either pro-rata over the term or as the service is consumed.

    For your last two questions, how do you do manage education and creative services for your other clients?

    • Service requests would come in as you normally would do them for those services, or as work order/service request amendments to the SOW.
    • For the PSA, I would manage it like you manage your other projects for this service.

    Is there a need to do something different? For many companies, one-offs are more likely to result in service failures, so streamline and fit it into your standard flow if at all possible.

    Hope that helps.

Sign In or Register to comment.

Hello there

It looks like you're new here. If you want to get involved, click one of these buttons!