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What Is Milestone Billing & When Should You Use It?

Milestone billing is super-useful for encouraging both parties to move a project forward, and make payments more manageable for clients – as they can space them out over the course of the project.

It can also help you prevent scope creep and running over budget. This isn’t rare – such problems occur more often than you might think.

Source: Business2Community

Milestone billing can be a solution to these problems!

In this post, you’ll learn how to prevent these issues and create a seamless milestone billing process for your next projects.

What Is Milestone Billing?

Milestone billing divides the process of billing your clients into smaller steps. You can see an example of that below.

Source: Big Picture

You usually get paid after completing each milestone.

Project Billing vs. Milestone Billing

Project billing refers to billing after the whole project has been completed. There are no sub-goals or smaller steps. 

Of course, you can get some money upfront as well – usually 50%.

What Are the Benefits of Milestone Billing?

Milestone billing has a lot of benefits that make it more secure and manageable for you and your clients compared to project billing.

Here are some of our favorite benefits of milestone billing.

Get Cash in Hand Faster

You no longer have to worry about whether you’ll get paid – or when.

The same goes for your clients; milestone billing eliminates uncertainty, and helps both parties stay secure. Plus, you won’t need to wait for months to get paid since it can take a very long time to finish some projects.

Instead, you’ll get paid periodically as you work on the project.

Good for Clients Who Like to Be in Control and Want More Say

Feedback and changes in design projects are inevitable. However, if you stick to project billing, then you’ll need to make the edits after the whole project is completed (which is a huge pain in the neck). 

Fortunately, milestone billing eliminates this problem by helping your clients see how you progress by looking at each agreed project milestone – allowing them to jump in, suggest changes, and give you an opportunity to apply them as you work on the project.

This is much more effective than re-doing large parts of the existing project.

Good for Repeat Customers You Trust

Even for customers you’ve worked with previously, and with whom you have a positive relationship, milestone-based billing can be a real advantage. With such clients, you know that you’ll get paid even if you go with project-based billing; however, milestone billing will help you get cash in your hands faster, allowing you to have a more consistent cash flow.

Of course, with previous clients with whom you have a good relationship, there can sometimes still be the risk of project creep. A friendly, possibly ‘informal’ relationship can easily lend itself to clients asking for ‘just one more thing’, or ‘just a few changes’. While this may not be a huge problem, these small extras can easily add up, and if they appear at the end of a project it could delay you being able to start work on another client’s project. For this reason, milestone billing negates this risk, allowing you to plan for the longer term much more effectively.

How to Effectively Apply Milestone Billing to Your Business

Milestone billing is a great way to get paid faster and stay secure. 

But there are a few things you have to be on the lookout for to properly organize projects and avoid scope creep – working on additional things without getting paid.

#1: Identify Project Milestones

The first step is dividing your project into smaller steps or sub-goals. The best way to go about this is to reverse-engineer the project. You start with the finished project in mind and work your way back.

If you’re giving estimates on timelines/schedules, base this on experience in past projects. 

Set out the timeline for the overall project so you know when you will have the capacity for more work – this is crucial for you to plan properly. Divide the project into milestones (also tied to payment terms). 

Source: eDrawMind

The best approach with milestone billing is to be as transparent as possible and define your delivery estimates at the start. Before you begin the project, you should know how many resources will be allocated, any tools required, and any content or deliverables that you’ll need from the client. Factor all of this into your project estimate. 

#2: Create a Milestone Structure

The next step is to put all this planning into action and organize it into easy-to-follow steps. We’ll be using Atarim (naturally!), since it is the best tool for project management and collaboration on visual projects (obviously!)

Head over to the Projects tab in Atarim and add a new project.

After that, it’s time to set the milestones you’ve researched and agreed upon with a client. You can set the milestone title and date.

You’ll then head over to the Boards tab and create tasks you need to finish to complete each milestone add the date, assignee, and urgency for each task. 

For instance, for our first milestone, creating a logo, we need to complete these.

Creating tasks is essential to prevent scope creep. Minor changes are acceptable, but if it takes too much time, you shouldn’t let it slip.

Of course, some projects are unpredictable and it can be difficult to pinpoint precisely what you’re going to do. For these instances, it can make sense to have a limit in the contract on the number of hours after which overages are charged at a standard rate. 

This makes scope creep seen as a positive thing, to allow you to do what the client wants, (and make more money, rather than losing it). 

#3: Collaborate with Clients & Get Paid

This step will help you a lot with:

  • Saving time on client post-project feedback
  • Improving client satisfaction
  • Finishing projects faster

Atarim gives you an opportunity to keep the whole conversation and feedback in one place. The first step is inviting clients into your workspace.

Head over to the Invite Users section in Atarim.

You will then need to add the users you invited to the project.

After that, you and your client can collaborate with our point-and-click collaboration – allowing clients to point at what they’re referring to and immediately leave feedback, say what needs to be changed, etc. 

This eliminates the need to rely on guesswork and endless back-and-forth emails – and keeps everything organized, preventing any unpredictable re-dos.

Are You Undercharging Your Services?

It can be difficult to estimate the time it takes you to create a project and, therefore, how much you should charge for it.

But knowing how much your time is worth is critical because It will help you:

  • Stop selling yourself short
  • Look more professional (you won’t hesitate when a client asks about it)

We’re going to use Atarim’s time-tracking feature to help you figure out your rate.

To start tracking time, we need to head over to the Dashboard Inbox or Boards.

Once you have found a task you would like to track time on, you can click the “Add Timer” button in the “Task Attributes” section.

This will add this task to your “Active Timers” in the bottom left of the screen. This only becomes visible if you have one or more tasks added.

To add another task to the active timers, we can click on another task and hit the “Add Timer” button.

You can only have one timer running at any given time.

After Action Report – Apply Milestone Billing to Your Services the Proper Way

Milestone billing can be superior to project billing if used properly. It can allow you to get cash in your hands faster, and gives your client more say in the process. However, it isn’t perfect, and you must be careful about the scope creep, unpredictables, and undercharging of your services.

And that’s exactly what our tool can help you achieve! 

Atarim can help you create milestones in seconds, add tasks with urgency and deadlines so you know precisely what to work on, and keep everything organized. With our time tracking feature, you’ll know exactly how long each task took, so you can discover your rates and prevent selling yourself short.

Also, you can leverage the point-and-click collaboration to allow clients to point at what they’re referring to and immediately leave feedback, say what needs to be changed, and so much more. 

If you want to eliminate all issues with milestone-based projects such as scope creep, running over budget, or poor planning, give Atarim a shot for free now.

  • Integrated into the leading visual collaboration platform trusted by 13,000+ agencies (web dev, design, and beyond) worldwide.
  • Supporting project delivery for 1,200,000+ of their clients and stakeholders.
  • Deliver projects in weeks instead of months.

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