I can’t even remember but I know I spent more time than I should have. Did I even price it right? Who knows.
I’m sure you have felt this way about a project at some point. It feels like you work and work and work, only to get done with the project and feel like the money you made wasn’t enough. Not because you are greedy but because you guessed at how long it would take you and that guess was wrong. But… your client is happy and you have other things to get done so you move on. Just to do it again.
So what can be done? How can you price your services right, have a good estimate on time, and feel like you made good money?
The easiest way is to keep a log. For ever project keep track of all expenses, time, and resources used (employees, equipment, etc). Keep track of every thing even if it isn’t billable.
A simple example:
You Quoted for
Design time: 7hrs
Information creation: 4hrs
Web site setup time: 7hr
Training time: 2hrs
20hrs worth of work at $20/hr for a total of $400
Time Actually Spent
Design time: 10hrs
Information creation: 5hrs
Web site setup time: 8hr
Web site training time: 2hrs
Non Billable Time
Travel time: 2hrs
Learning new code to create a function on the site: 3hrs
Billing rate: $20/hr
Total time: 30hrs
Total time billed: 20hrs
Billed cost: $400
Lost profits: $200
Actual Rate: $13.33/hr
By keeping a log at the end of a project you can now figure out how much time you and your business spent on a project. For the example above you charged for 20hrs worth of work, actually worked 30hrs, gained a new skill but had 5hrs of overages so you were paid actually $13.33/hr. That doesn’t include the taxes you will have to pay. So in the end you will probably make less than $10/hr. That doesn’t seem very acceptable. Now imagine if you did this on every project.
By creating a standard logging system that can be used for every project you can
- See how much time you are spending on a project versus how much time you are billing for.
- Compare projects and create stats.
- Estimate projects and billable time better.
- •Find out where you need to improve.
- And more.
You don’t have to go crazy with your logging system either. Start small and create some thing that is easy, works for you, and will give you a clear picture that will answer “How much time did I spend on that?”