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Are you getting paid enough on client projects?

Do you track your time for client projects? Should you? And if so, how best to do it?

Tracking the time you spend on a client’s project might be easy for you. Or it could be a nightmare. The more a person works in a silo, the easier it is. The more a person multi-tasks, the harder it is.

There are two reasons why one would want to track project time. The first is the most obvious; if you charge by the hour, you need to track those hours. If you don’t, you won’t get paid for your work and the clients will not be satisfied as to how much work they are paying for.

The importance of time tracking

I hate tracking my time. I’ll get to why later, but for now let’s just say that I charge by the project so as to avoid time tracking. I charge for my expertise, for the results, for the deliverables. I don’t charge for my time, so I don’t track my time. In the process, I save the time that I would otherwise spend tracking my time. Yes, tracking time costs time. It can cost a little time or a lot of time depending on how you do it, but it costs time.

So the easy solution is to just do what I do and charge by the project. This is often possible, but not always. Some clients will hire people only for an hourly fee. Depending on the nature of the work, it might even make more sense to charge for time.

And I will be the first to admit that there is a convenient reason one might want to charge by the hour; it puts the responsibility on the client not to waste your time with scope creep (where the project gets bigger as you proceed), delays, babysitting and rehashing work that has already been completed.

Deborah Anderson explains about a recent project:

“Because of scope creep and specifically the lack and delay of decisions on the part of the client, time was wasted. For example, the client had not decided on specific vendors, and when she did decide on a vendor, she would change her mind and choose another vendor. This affected the custom code that I was working on for the project. What this resulted in was lost time. When calculating my pay per hour of the project, it was dropping.”

Tracking for better time management

There is a more important reason to track time, for which I know many readers will be wagging their fingers at me right now – for internal monitoring. When you track time, you know how much time you spend on each project. You know how much work you put in. You know whether you are working for peanuts or not. This is why Deborah Anderson tracks all her time, “…for my own time management purposes.”

Time is your most precious resource. It’s one thing you do not want to waste, because you will never get it back and you can never acquire more. Tracking can help you manage your time and reduce waste.

This can be particularly tough for perfectionists.  Gary Aviles often found himself putting too much time and effort into client projects:

“The greatest challenge I faced was that I would work until the job was done to my satisfaction no matter how long it took.  Many times, you can be done within an allotted time frame and you can meet your goals.  But, in the end, if I was not satisfied  with the product I had to keep going or the feeling of non-accomplishment would linger like a dark cloud.  It was never an insane amount of time, but I would stretch the limits when needed.”

If you work at an agency, tracking client project time is absolutely essential. If the agency pays you $30/hour, they have to make at least $35/hour from the client to make a profit. If you work too many hours on the project, the agency might be making only $25/hour from the client, and be losing money.

Emory Rowland used to work at an agency:

“The first agency where I worked insisted that everyone track their time spent on each client on an antiquated system that took about an hour to record times each week.”

It had to be done, but that hour is a cost, because the agency was paying him for an hour of work that did not earn the agency any money. That is why it is important to be ultra-efficient when you track your time, something that is not lost on Due.com CEO John Rampton:

“We are always watching for ways to make our time-tracking software simpler and more intuitive so that our clients save time. Time is money, and when we save our clients time, we know they are saving money.”

Now running his own agency, Emory still tracks his time to make sure he is working efficiently:

If there’s a red flag and I’m spending too much time on one client, then I need to do something different. I actually had an issue with a client where I had to put the brakes on and say no, here’s what we can and cannot do. It ended up being a positive turning point in the client relationship.

How can you reconcile time tracking with multi-tasking?

How can you reconcile time tracking with multi-tasking?

When you work for an agency, you are assigned certain clients and your time is spent specifically on those clients. When you are a freelancer, you wear many hats. Client work is just one of the many things you do. You have to be an expert multi-tasker, as Uttoran Sen is.

“I love multi-processing. I manage about 10 things at the same time – which includes off line distractions like TV and house hold chores like washing clothes etc.

So, when I am working, I am also on Facebook, working on a new blog post, writing articles for guest posts, checking tweets and making blog comments, etc. I have plenty of open tabs on my browser, which I keep checking one after the other. In such a case, if I have to track time spent on a client’s project – it becomes almost impossible.”

Uttoren’s work habits are like my own – yes, even the laundry sometimes. The main reason I don’t like to charge by the hour or track my time is because it would be a nightmare to try calculating how much time I spend on each project in my multitasking universe. As Uttoran puts it:

There is no easy way to track time spent on a client’s work. I have used stop clocks, given certain projects dedicated time and even sometimes allocated a particular session of work for a client, say – the time after the evening tea and before late night snacks.

Work done is a far better metric than time, and it can be measured a lot more easily if broken into small micro jobs, though maintaining records in such a case is a job in itself.

Darren DeMatas agrees that there are better ways to bill than by the hour:

If your agency is efficient, you won’t bill as many hours as one with slower processes, but you’ll still end up providing work that produces the same or similar results. Either you lose for being efficient or clients end up paying for your agency’s inefficient processes.

He suggests tracking all the non-billable hours, too – the time spent researching for the client, preparing proposals, etc. Which is all fine and dandy if you dedicate the time just for that, rather than multitasking.

Still, there are tasks that can’t be done as well when multitasking. I am in the process of ghostwriting a book on investing. I really do need to put the rest of my work on silent mode in order to write a cohesive chapter efficiently, because once I start, I get on a roll. The same with blog posts. As I write this post, I am leaving the writing only to check the quotes of my sources. But when I edit, set up the picture, publish and promote the post, I’ll be multitasking again.

So how would somebody like me know whether I am working for $50 per hour or for $5 per hour? It is pretty simple. If at the end of the year I am not making enough money, it means one of two things:

  • Either I need to charge more for each project, or
  • I need more clients

This takes me less time to track and gives me a good global picture, but it is less accurate and certainly not specific to the individual client. Ultimately, you’ll have to decide for yourself how you best want to manage both your own time and your client relationships. But however you wish to track your time or your pay rate, make sure to do it as efficiently as possible. Time tracking should help you maximize your income per hour, not reduce it.






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15 Responses to “Are you getting paid enough on client projects?”

  1. Preston Odenbret (1 comments) Says:

    David, just reviewing an app called DO, easy way to track time and so much more, they also have IF and that is powerful as well. But a bit more complicated to set up. Not clear instructions on how.

  2. Uttoran Sen (1 comments) Says:

    Hey David,

    Thank you for giving me this opportunity to share my thoughts on the topic.

    I guess time calculation is always a major issue for freelancers who are working by the hour.

    On GuestCrew when I hire someone I prefer to bill them by work done breaking the work into several micro-jobs. Unfortunately on the technical part, where my own knowledge is limited – I generally leave it to the coders and the designers to count their work hours by themselves. Unless the bill is something groundbreaking, it generally works out.

    thanks,
    Uttoran Sen,

  3. Tom Treanor (1 comments) Says:

    Nice post David and I agree with many of your points. I think the other thing with billing based on time is that the clients try to rush or skip certain steps that are important to the consultant (and the project) but the client sees as extra. They also start to second guess how long things take. Per project or retainer billing takes away a lot of this and I think the answer to your question is to charge more (by proving great value on each project).

  4. Brent Jones (7 comments) Says:

    ‘scope creep’

    ^ Huh! I never knew there was a term for this, David! Thanks.

    I too charge by the project… and although I don’t think I’ll switch to an hourly model any time soon, I did just recently raise my prices for any new clients I bring on-board. There just aren’t enough hours in the day to take on any more clients for my old prices.

    Great post and topic!

  5. David Leonhardt (161 comments) Says:

    Hi Brent. All it takes is one government contract to never forget the term “scope creep”.

  6. Lawrence Berry (2 comments) Says:

    You are absolutely correct that time is the most precious thing that we have, so you have to be able to know if you are charging enough. In whatever market that your business is in, you should be able to know how much you should be able to charge for a project, and the more known and reputable you become, the more you can charge. Trying to track your time for each project is a waste and can cause a lot of headache. Just know what the project is, how long it may take from your past experiences, and charge from that.

  7. Phillip Dews (1 comments) Says:

    Hey David,

    what an awesome post buddy, this rang a lot of bells in my head and I found myself agreeing with a lot of what you had to say.
    Speaking from experience as a decade long freelancer I would recommend a few things to people looking to go it alone and become a freelancer like yours truly!
    1. Do you consider yourself a profesional? is your work up to scratch? If you worked for someone else what would you be happy with per hour?
    2. Have an airtight contract and have get out clauses as sometimes the client/freelancer relationship breaks down so a getout clause is needed!
    3. Out of hours and scopecreep clause, I usually add on a daily rate of £250/per day for scopecreep and if a client wants me to work at 2am then I will charge at £50 an hour (double my normal hourly rate).
    4. work out a per project price! Normally I am hired to build WordPress themes and these can take me anything from 80 to 100 hours so my fee derives from my hourly rate of £25 an hour! I usually tell my clients that it will take anything from 10 to 14 days to complete a project which normally gives me a few days leeway to test the theme before launch!
    5. Don’t force it and have fun! It’s really easy to fall in the trap and do 14 or even 15 hours a day! I limit my pc time to 7 -8 hours a day and keep most of my weekends free!
    Hope this helps a few more readers David! Top post buddy!

    – Phillip Dews

  8. Sunday (4 comments) Says:

    Hey David,
    Quite a thought-provoking piece! Time tracking for projects is a function of the type of work being done or the system preferred by the client.

    Personally, I have never done project that require time tracking unless I want to mathematically calculate the hour’s worth by dividing with the total amount. I am a project earner person and most of my clients prefer it so.

    Well, this is not to say that time tracking for project doesn’t make sense. I would like to be involved in it if there is a efficient system to track time and improve productivity.

    I always have the impression that projects that cannot be measured are those that can be time-tracked.

    I left the above comment in kingged.com as well

  9. David Leonhardt (161 comments) Says:

    Sunday, I think you have hit the nail on the head. Whether you track time or not, it helps to charge the way the clients prefer. Some want to pay by the hour because they can more easily compare costs with something measurable (time).

    Others prefer to know the price of the project and just want you to put your skills and expertise to work.

    My experience is that those who want to pay by the hour do so to keep costs down, so they want you to bid on work as low as possible, so that they can take the lowest price. I never sell my services on price; I always sell on quality. That might be why I prefer to charge by the project.

  10. FreddyGandarilla (1 comments) Says:

    Hey David!

    Interesting post on time management!

    I can relate to you about not really liking to track my time, when working on a project. Although, I do not work for any agency, just for myself. haha … but I get why you like to work like that!

    I think, time management is very important, however you want to approach it and work it. Some people like to micro manage every minute and second, and others just set a fixed time frame to get the tasks done.

    However you manage your time, is fine, as long as you are recognizing that you must take good care of time!! … because you will never get back the time passed! 😉

    Very interesting topic and valuable info you got here man!

    Have a great week! 😀

  11. metz (1 comments) Says:

    Mind provoking article about time and work David. Very interesting and smart topic.

    Time is precious to each of us. Clients pay you an hour and expecting something beyond what they should expect. However, the question is, are you getting paid enough?

    You yourself know the answer. The article teaches us to make things clearer. Is an hourly kind of project better or not? If not you need to raise your rate, charge more or make more clients.

  12. johan (1 comments) Says:

    I think, time management is very important, however you want to approach it and work it. Some people like to micro manage every minute and second, and others just set a fixed time frame to get the tasks done.

  13. Ivan Bayross (2 comments) Says:

    Hi David,

    I agree, the more a person multi-tasks the tougher it is to figure out how much time is being spent on a client project.

    I today’s incredibly busy work world, without multiple projects running concurrently and smoothly I seriously doubt, bills will get paid, forget about becoming rich and successful.

    With tracking time costing time, tracking the time one spends on a client’s project is often a very tricky, complicated, issue that seemingly has little or no significance because one has quoted for – The Project – not for time and skills.

    Today, charging by the hour, then tracking this meticulously, sending detailed reports to a customer justifying hours consumed, getting into arguments because what you needed to do does not match what the customer actually had in mind, (You budgeted 8 hours the customer 2 hours).

    I wonder if it’s ever worth the trouble taking on a project on and hourly basis and then figuring out the necessary and unnecessary time overruns mapped to cost overruns.

    I’ve had customers who happily spend hours talking to me on Skype, often pointlessly and all over the show, who have got awfully agitated when billed hourly for the Skype call, while this is quite clearly mentioned in the agreement.

    Okay, these customers are not behaving how the majority of the customers behave but then as a counter most of the customer’s I work with I quote for the – Project. Does the project time line get padded for Skype calls, oh! sure it does.

    As service provider one needs to factor long and/or meandering Skype calls into the – Project – time line as well as instant scope creep due to an – enlightened – wife or mistress or whatever (maybe just a bulb going off).

    Now I know all about time being a really precious commodity, once spent it never returns, but I’m not paranoid about time management.

    I just spend a couple of hours a week on my own time management to help ensure that I’m not really wasting time on processes that can be made more time efficient. I do this out my inner drive to get better and better as whatever I do, nothing more.

    At the end of all of this, whenever I do a time versus returns audit, (simply put can I pay all the bills and have about 30% left over for me) and it fails, I know I need more clients, if it does not fail and the 30% return goal is met, I know I’m doing great.

    Now if only I can get my wife to use 25% of the 30% and leave 5% for ME, I’ll celebrate. Ah well, I’ve always lived in HOPE.

    Lovely read David, enjoyed every minute of it.

    I came to this post via a link on Kingged.

  14. David Leonhardt (161 comments) Says:

    Hi Ivan.

    That is quite a rant, and it shows just how complex it is to keep track of one’s time. If a person loads boxes on the dock or cookies fries at the restaurant, he just has to punch in and punch out. It’s not that complicated. But for folks like us, it’s like swimming through a pool of sharks at feeding time.

  15. Ivan Bayross (2 comments) Says:

    Ah! David, The visual of swimming through a pool of sharks at feeding time . . .
    The perfect wordsmith.

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