They say that time is money.
But time isn’t money. Time is so much more than money. Time is the one thing no one can truly get more of. All people come equipped with the same 24-hour day, rich and poor.
And which category you fall into is largely determined by how you make use of the time you’ve got.
So how good are you with time, as a freelancer?
What if I told you that you’re under-billing your clients by at least 25%-maybe more? Practically hemorrhaging time-and money?
Even though time is our stock in trade, as freelancers, we’re no better at managing time than the rest of the world. Perhaps we’re even worse.
If there’s one mistake I’ve seen everyone commit in my 11 years as a consultant, it’s underbilling their time.
If you’d like to discover 25% more income, ask yourself the following three questions:
Do I track my time with a minimum billing increment?
If you answered “no,” then you should start. The industry standard minimum billing increment for most creative freelancing fields is 15 minutes.
That’s right: this means that you should never bill a client for less than 15 minutes, or one quarter of an hour.
This is to account for the intellectual and business overhead of switching from task to task when tasks are small, and for insuring you (as a freelancer) do not suffer death from a thousand tiny cuts. So, when you:
- spend 10 minutes thinking about the project
- write email for 8 minutes
- spend 12 minutes uploading the new logo
…you should bill for 15 minutes. And no less.
Do I bill my client for all my time, every time, or do I give them little freebies?
When you read the bulleted list above, with its 10 minutes here and 5 minutes there, did you find yourself thinking “What? I wouldn’t bill for that at all!”?
If so, don’t worry, because you’re not alone. This particular freelance mistake is as common as dirt, and no one’s immune to it.
But think about it. If you don’t bill 10 minutes here and 5 minutes there, and 15 minutes hither and yon, you’ll lose several hours before the project’s out. And that’s for small projects!
Remember, your clients hire you because you’re good at what you do. They trust you as a professional and they benefit from the experience you bring to their projects. They are glad to be able to hire someone on a contract basis, with higher flexibility and lower cost than a full-time employee.
In short, you’re practically a steal.
If you want to do your clients a favor, put a little bit of extra excitement and passion into your work. Don’t underbill them. When you give your client “freebies” in the form of time, you’re just lowering your own pay rate, which will make you miserable in the end.
Miserable freelancers do crummy work. And that’s no favor at all.
Do I properly account for hours required to operate my business, that I can’t bill for?
Every project has its start-up costs, and an awful lot of those costs go unrecognized. Do you track the time you “can’t” bill for, like:
- sales telephone calls or emails
- potential client interviews
- writing up proposals
- driving to / visiting the potential client
No? Then you’ve got no idea what your true hourly rate is.
You may bill at $30 or $50 or $100 an hour, but you’re not, because you’re not dividing your total income by all the hours you spend on a project.
And if you don’t track those “unbillable” hours, you can’t calculate your true hourly rate. Hint: it’s probably a lot lower than you think.
Applying these three techniques will improve your business awareness & increase your income by up to 33%.
Use techniques 1 & 2 to squeeze more billable time out of any project (time you were already spending), and track your unbillable time to improve your time estimates for all projects going forward.
- bill your time with a minimum billing increment
- track your time religiously, no “freebies” given, and
- determine how much time you spend on projects before you get to the “billable” time
You can bill more of your time right away. And you’ll be on your way to a happier, healthier, more profitable consulting business.