How Much Money Should You Spend On Client Gifts During The Holidays?

Posted on December 17th, 2016
Holiday Gift Spending

We’re officially in the holiday season (and let’s face it we’ve been feeling this coming on for months, now). You’ve probably done your decorating, or had someone do it for you. You have made your holiday travel plans, and you’ve done a lot of shopping for your friends and family.

If you’re a business owner, you’ve probably been thinking about how to reward your employees for all of their hard work. But, what about the clients that have helped make you become successful as a solopreneur, an entrepreneur or a businessperson?

As a full-time freelancer I think it’s only fair to thank those clients who have helped me become my own boss. Whether I’m just feeling grateful because of the steady work they have provided me or for all of the knowledge that they’ve passed along, giving them a present is the least that I can do for them.

But, how much should I spend on my clients this holiday season?

Who should you buy gifts for?

Before you start going on a spending spree, take a couple of minutes to decide whether or not you should, in-fact, buy your client’s presents. I understand that you want to thank your clients, but that doesn’t necessarily mean that they deserve a gift. In fact, a handwritten note or holiday card may suffice.

Since this isn’t an easy decision to make, here are a couple of factors to consider:

  • How long have you been working with the client? You anchor clients that have supported you for years are more deserving of a gift than your one-off clients.
  • How easy, or difficult, it is to work with a client. Do you honestly want to buy a present for those deadbeat clients who never pay your invoices on-time?
  • How well are you compensated for your work?
  • Have you enjoyed the projects that the clients assign you?
  • Consider the time and effort you put into the projects. A gig on Fiverr doesn’t take as a long as building an entire website for a client from scratch.
  • If you’re currently working on a major project for the client, you will want to consider this.
  • Has this client sent you business by sending referrals your way?

Also keep in mind that some organizations prohibit employees from receiving gifts, so in that case you may have no other option than to send your client a card.

Don’t forget to consider their beliefs. Some clients may not celebrate Christmas, but, they still accept gifts. It is also, possibly worth noting that most major religions have some sort of holiday or ceremony in December so a remembrance gift for that particular may be a thoughtful gesture.

Find out. Sometimes merely sending a New Year’s greeting card may be a better option.

Establish a holiday budget.

After you’ve determined who you’re going to purchase gifts for, it’s time to set a budget so that you’re not overspending on gifts.

One way to determine this budget, according to Courtney Nagle in an article for Clearpoint, is to spend no more than 1.5 percent of your income on holiday spending, which includes gifts, food, parties, travel and holiday donations. For example, if you make $50,000 per year then your holiday budget would be $750 and would be broken down as follows:

  • Gifts – 50 percent: $375
  • Parties – 10 percent: $75
  • Travel – 20 percent: $150
  • Food – 10 percent: $75
  • Donations – 10 percent: $75

It’s a pretty simple formula to follow and definitely helps keep your spending under control this holiday season.

Choose your amount per recipient.

With your budget intact, it’s time to choose how much you’re going to spend on each client. One of the easiest ways to do this is by dividing that $375 amount by the number of clients you have. So, if you have 5 clients then you would spend $75 on each client.

Of course, if a client only netted you $100 for the entire year, and another contributed $15,000 to your annual profit, then it’s probably a better idea to send the higher paying client a more expensive present that costs around $100 and stick to sending the other client a thank you card.

While the exact figure is ultimately up-to-you, it’s the norm to spend between $20 to $50 per client (remember, you can only deduct $25 for business gifts per client) on a items like a plant, gift basket, or charitable donation, and not to go overboard on the amount that you spend on a present.

As Bruce Bachenheimer, director of the Entrepreneurship Lab at Pace University, explains; “If you’re rolling out the red carpet for a customer, they’re going to assume you have incredibly high margins to do all that spending. They’re going to think, ‘Oh, he’s overcharging everyone — including me — in order to afford all this.'”

Bachenheimer adds that clients today are saying, “Forget the hunting trip, forget the lavish treatment — just give me a better price.”

The rules of holiday client gift-giving.

After making your list, checking it twice, and setting a budget, the final hurdle to leap over this holiday season is what type of gifts you should purchase for your clients.

Here are a some rules to keep in mind as you shop:

  • Be personal, yet professional. Sending your client who doesn’t drink a bottle of wine isn’t the best gift that you could send them.
  • Always choose thoughtfulness over expense.
  • Make sure that the present arrives around December 20. If a product is backordered, then look for something that will definitely arrive on-time.
  • Food and alcohol are nice presents, but they’re generic and don’t set you apart. If you do want to send these types of presents, send something that you know that client would enjoy because they mentioned it to you in passing.
  • Gift cards are awesome, but let’s be honest, since some people don’t put a lot of thought into this gift, it is occasionally thought of as the lazy person’s gift.
  • A note may be just as meaningful as the gift.
  • Holiday presents aren’t shameless plugs. Please don’t send your client’s swag with your logo on it.

Whatever you do, now you’ve got to hustle. It’s getting late. Can anyone else but me hear sleigh bells already?

John Rampton

John Rampton

John Rampton is an entrepreneur and connector. When he was 23 years old while attending the University of Utah he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months he had several surgeries, stem cell injections and learned how to walk again. During this time he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine, Finance Expert by Time and Annuity Expert by Nasdaq. He is the Founder and CEO of Due.

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