they said that time is money.
But time is not money. Time is much more than money. Time is the one thing no one can really get more of. All people come equipped with the same 24-hour day, rich and poor.
And the category you fall into is largely determined by how you use the time you have.
So how good are you over time, as a freelancer?
What if I told you that you are underbilling your customers by at least 25%, maybe more? Virtually a hemorrhage of time and money?
Even though time is our stock in trading, as freelancers we are no better at managing time than the rest of the world. Maybe we are even worse.
If there’s one mistake I’ve seen everyone make in my 11 years as a consultant, it’s underestimating their time.
If you want to discover 25% more revenue, ask yourself the following three questions:
Do I track my time with a minimum billing increment?
If you answered “no”, then you need to start. The industry standard minimum billing increment for most freelance creative fields is 15 minutes.
That’s right: this means you should never bill a customer for less than 15 minutes, or a quarter of an hour.
This is to account for the intellectual and business overhead of switching from one task to another when the tasks are small, and to ensure that you (as a freelancer) don’t suffer death from thousands of small cuts. So when you:
- spend 10 minutes thinking about the project
- write email for 8 minutes
- spend 12 minutes to upload the new logo
…you must bill for 15 minutes. And nothing less.
Do I charge my client for all my time, every time, or do I give them small gifts?
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 that at all!”?
If so, don’t worry, because you are not alone. This particular freelancing mistake is as common as dirt, and no one is immune to it.
But think about it. If you don’t invoice 10 minutes here and 5 minutes thereand 15 minutes here and there, you will lose several hours before the project is finished. And that’s for small projects!
Remember, your clients hire you because you are good at what you do. They trust you as a professional and benefit from the experience you bring to their projects. They’re glad they can hire someone on a contract basis, with more flexibility and less cost than a full-time employee.
In short, you are practically a steal.
If you want to do your clients a favor, put a little more emotion and passion into your work. Don’t underestimate them. When you give your client “freebies” in the form of time, you are only lowering your own pay rate, which will make you miserable in the end.
Miserable freelancers do a horrible job. And that’s not a favor at all.
Do I correctly account for the hours required to operate my business, which I cannot invoice?
Every project has its start-up costs, and a large number of those costs go unrecognized. Do you keep track of time you “can’t” bill, such as:
- sales phone calls or emails
- interviews with potential clients
- proposal writing
- drive to/visit the prospect
No? So you have no idea what your true hourly rate is.
You can bill $30 or $50 or $100 per 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 keep track of those “non-billable” hours, you can’t calculate your true hourly rate. Hint: It’s probably a lot shorter than you think.
The application of these three techniques will improve the knowledge of your business and increase your income by up to 33%.
Use Techniques 1 and 2 to squeeze more billable time out of any project (time you were already spending) and track your non-billable time to improve your time estimates for all projects in the future.
If you:
- bill your time with a minimal billing increment
- track your time religiously, with no “gifts” given, and
- determine how much time you spend on projects before you hit “billable” time
You can bill more of your time right away. And you’ll be on your way to a happier, healthier, and more profitable consulting business.
