Project & Invoice Allowances Best Practices
“Sometimes a project is perfectly predictable.” Said no freelancer ever.
Allowances are how you plan for the “totally normal surprises” without turning every tiny curveball into a fresh negotiation with your client. It’s best to think of them as a built-in contingency bucket that’s visible, trackable, and easy to bill.
We think we’ve put a pretty neat spin on them, and are excited to say that you can now manage allowances end-to-end inside Wethos.
Log in and follow along setting up your first allowance
Project Allowances
On your project budget page, you create an allowance for that project, setting it as a flat dollar amount or percentage of the total.
We’ve baked in a few best practices for allowances that help you with your clients:
You know or can estimate your clients best, but our guidance would tell you that allowances are normally 5% to 20% of a fixed-rate project’s cost.
Once you've set a project allowance, it becomes part of your estimate for services and is separate from your expenses and margin inputs.
Allowances are then “spent” by adding them to invoices, and the spend is recorded with a description and amount. The great part about this is that allowances don’t disappear all at once. They’re spent in pieces, and added to invoices as they’re used. That gives you visibility, and it gives your client visibility too.
Allowances aren’t about sneaking in extra revenue, but instead about acknowledging reality. Creative and technical work rarely unfolds in a straight line. We all know that clients will change their minds, ask for an extra review, certain platforms update mid-project, there will be a few late arrivals to key inputs, and new constraints often surface halfway through a project.
If you don’t use the full amount, you don’t bill it. Simple as that. That reinforces trust, and psychologically, that matters more than most people may realize.
In our experience, clients don’t mind paying for value. What they dislike is surprise, and allowances reduce surprise.
If a project starts drifting or scope begins to stretch quite a bit, you’re not stuck having an uncomfortable surprise conversation. You can say, for example, “We’ve used about 50% of the project allowance so far” and have that create a natural checkpoint.
This, in our experience, will ultimately help you to manage your client interactions better.
Instead of reacting when things are already off the rails, allowances let you pause early and decide what happens next with your client. Maybe it’s fine and you keep going. Maybe you tighten the scope. Maybe you process a change and adjust the budget.
The key is that you have data and a way to have a great interaction with your client, which leads to more repeat business and more referrals.
We’ve put the Allowances right on your budget chart, so you can see specifically how much is available and how much has been used tracked in your project dashboard alongside your deliverables.
Over time, clarity and interactions with clients compound. You will have smoother projects, stronger trust, better margins, and clients who feel like you run a tight, professional operation.
Which, frankly, you do, with Wethos.
What about the contracts?
It’s ultimately up to you how you include these in your proposal, which we recommend you do! We’ve provided a contract terms template to help you get started. From the proposal builder, simply scroll down to the contract terms section > toggle it on > select “add contract term” and “from templates”. You will see our suggested terms under “Wethos Templates” > “Adjustment Allowance”
Whether you’re new to using allowances, or you’ve already been applying these to your projects, we’d love to hear how the Allowances feature is working for you! Reach out at support@wethos.co and let us know your thoughts!