Q&A: We Charge for Our Work

December 13, 2010

Posted in Higher Ed.

Andrew Jackson on the $20 bill, photo by http://www.flickr.com/photos/thomashawk/540936323/

At Notre Dame, we charge our clients for the work we do. Many schools are tinkering with their internal business models and testing the options.

We’re partly funded by the University, so we’re required to recover part of our budget through chargebacks (also known as cost recovery). I have a billable goal for the year, and have to run my business in order to hit this goal.

Meanwhile, there are folks who don’t play by the same rules. When the President’s office calls, we respond immediately. And that office doesn’t pay for work. The rationale is two-fold: we get funded (in part) by the University already, and they don’t set aside a marketing budget.

In theory, this is great. But in practice, it presents a few issues. I want to address some of these common questions.

Won’t my work get trumped by more important stuff?

For paying clients, it’s frustrating to have work trumped (and re-scheduled) because of an executive project that comes in. This happens fairly frequently. But we usually get some notion of when this will happen, and work around it. Fortunately, very few projects have such a tight deadline that they can’t be shifted by a couple of days.

Aren’t we just moving money from one pocket to the next?

This is absolutely true, but the alternative would be to move those dollars directly outside the University. With an in-house chargeback model, we’re creating an internal economy. Since people don’t have to use our group, you can look at us as an inexpensive alternative to outside firms.

What if you can’t meet the demand?

We’ve had this problem for years – there’s more work coming in than we have capacity to do. Instead of simply putting people on an ever-growing list, we’ve established a preferred vendor program that lets us refer ND clients outside to firms who meet certain standards of quality and are willing to work with us to maintain the brand. It’s not always as cheap as working with our team, but it’s better than not getting your project done.

Why can’t you just hire up?

Part of the goal of charging our clients for work was to have more flexibility over our staffing and resources. However, we still have to adhere to the University’s policies and procedures for hiring. And in the current environment, approving new FTEs (i.e., a full time position) is a difficult task. As more projects and University dollars flow out to external vendors, we expect the administration to approve more positions. That said, we’ve had success in approving a few new positions in recent months.

Why charge at all? Why not just work for free?

This is one route that many schools take, and as many of them will attest the issue becomes one of prioritization and leadership. Who tells a campus department that they’re not important enough to be helped? And who decides what the priorities are? In my experience, many of the most important projects are ones that seize opportunities or respond to issues as they arise. It’s not always possible to plan a year out, or prioritize against the unknown. But being responsive, flexible, and agile are excellent qualities of a group that works in an ever-changing industry.

Would you choose this model?

My ideal scenario would be one that involved a strategic plan, a work plan for the year, and no billing whatsoever. We would work on projects that served the University’s greater interests and set aside time for emergency needs. But to be frank, we’re just not that organized. As a department, we sometimes struggle with project scope and estimating our time. Across the colleges and schools, some work more strategically than others and so many crucial projects go unaddressed simply because people aren’t ready to work on them. And as a University, our core mission is one of education. Our leaders are rightfully focused on greater challenges than what the web team should be working on.

The cost-recovery model allows us to thrive in a belt-tightening economy, provides incentives for clients to stay on track, and allows University leadership to prioritize through budgets. In talking with my colleagues at other institutions, many who live in the purely-free realm are eyeing my department’s model and wishing they could charge for their work. But perhaps the grass looks greener because that’s just where the money is.