For some reason, time-tracking gets a bad rap. Maybe it’s because it feels a little like you’re punching a card at a factory or being watched over by ‘The Man’. The thing is, when you work for yourself that couldn’t be further from the truth.
If you freelance, time-tracking is your friend. Used right, it’ll improve your planning, workflow, client relations, and even increase your creativity.
Best of all - it can also be used to bump-up your hourly rate, so you get paid more money for the hours you’re tracking. We’re about to show you how in six easy steps.
Step One: Understand Why Time-Tracking Is So Important
In order to use time-tracking software to increase your hourly-rate, the first thing you need to do is understand why it’s so important to track your time in the first place. Do that, and you’ll have taken a huge step in the right direction towards receiving a bigger paycheck for your freelance work.
Simply put, if you don’t time your work, you don’t know how long it takes. And if you don’t know how long it takes you have no idea what your hourly rate is. It’s as simple as that.
I’ll give you an example.
Let’s pretend you’re a freelance writer who lands a sweet job getting paid $500 to write a blog. If that job takes you five hours, you’re getting paid $100 per hour. Easy money.
But what if you spend a little longer than expected on research? Or put in a couple of extra hours over lunch? You could end up working double the hours intended, and now you’re only making $50 per hour.
Suddenly, that $500 doesn’t seem so great.
Of course, that’s a very crude example, but it’s easily done and believe me, it happens. If you’re a freelance designer who lacks structure, or run a small business and put in a lot of work after hours for your clients - if you don’t use a time-tracking tool, an hour here and a half-hour there can soon add up.
Step Two: Start Time-Tracking And Record Your Day
Once you get your head around step one, step two is easy. All you have to do is start timing your freelance work along with the rest of your activities throughout the day. It’s as simple as that.
Time work you do for your clients. Time the hours you spend on social media. Time how long you take for breaks or doing admin. Time everything.
Even keep track of your personal time (more on why later), which is easy enough to do with the Solo iPhone time-tracker - free to download if you’re a Solo subscriber.
Use time-tracking software to record everything you do during the day. And if you’re not using a specialised tool, like Solo, to time your work (which does this next bit for you automatically), it’s important to make a note of your tasks as well - not just your hours.
When time-tracking, the goal is to capture as much information as you can about what you’re doing and where your time’s going; and to do so with as much detail as possible.
And here’s a little tip - keep track of any time spent chasing payment and attach that to the job also. You can't bill them for this, but it'll come in useful later on.
I’ve wasted too much time over the years chasing clients for money, so I don’t stop timing work on a job until a cheque is in my hand.
Only once that money’s in the bank is the contract complete and both ends of the bargain fulfilled, signalling you can move onto step 3.
Step Three: Digest Your Data
So the project’s wrapped. Now you can sit down, go over the hours you logged with your time-tracking software, and take a look at how much time you really dedicated to your client.
With a complete and thorough breakdown of time spent on a job (including any hours spent chasing payment), you'll be able to see how long it truly took you to complete a job.
Step Four: Figure Out Who Your Most Profitable Clients Are
Now that you’re armed with precise data about your time and work, you can use it to figure out your actual hourly rate and decide how much to charge your client next time.
Not only that, you can use it to help put together more accurate quotes for future freelance work and figure out your most profitable clients; that's those offering the best time-to-money ratio.
Eventually, what you want to do is start replacing your clients with a lower return on your time with those that offer you a better time-to-money ratio. And that's how you move up the freelancing pay ladder.
Step Five: Improve Your Workflow And Start Charging More
And once you have all your hours in front of you, there are other ways you can use the information gathered by your time-tracking software to increase your freelance wage.
The first thing you want to do is take a look at your workflow and see if there’s a way to improve it. A more efficient workflow will make you more productive, and help you squeeze more money out of your day.
And if you start getting your work done quicker, you can do two things: Work less and start charging your clients more.
If the idea of charging your clients more alarms you, don’t worry. They won’t mind. In fact, they’ll welcome it - and here’s why.
If a job is going to costs a client £100 and takes you 10 hours to complete, a client is not going to mind if you charge him £100 and do it in five thanks to your new and improved workflow.
He’s paying the same as he was before, and you’re getting his work done in half the time. To me, that's just great service, value for money, and being damn good at your job.
Even if you don’t double your rates and just bump your freelance fee up a little - if you halve the time it takes you to complete your work by using time-tracking software, everyone’s a winner.
Your client will be charged less, you can earn a better rate per-hour, and still have time left to fit more paid work into your day.
So you see, used correctly, time-tracking is not only a great way to start earning more for your freelance work - it’s also a way to show clients that you offer excellent value for money when doing it.
Step Six: Make The Most Of Your Time
Finally, you can use the time you’ve logged to look at your ‘opportunity cost’ potential. That’s basically a fancy way of saying money you could have earned.
The New Oxford American Dictionary defines it as "the loss of potential gain from other alternatives, when one alternative is chosen". So basically choosing to play Xbox, sleep in, take long lunches, or do work for the clients we spoke about in Step 4 (who offer a low time-to-money ratio when you could be getting better), are all opportunity costs.
Or, to put it another way, opportunities to earn.
It’s a key concept in economics and has been described as expressing "the basic relationship between scarcity and choice”. And as you well know, when you’re working for yourself - time is often scarce.
So take another good look at what you’ve been doing with your day (especially that personal time I told you to log earlier), and see if there’s anywhere that you’re wasting time you could be charging for.
Email, social media and lunch breaks are just a few of examples of time-sucks that tend to be highlighted when you start using time-tracking software. And if you can spend a little less time on them, it can add up to a lot more earning potential through the week.
If you freelance, you can use time-tracking software in a number of ways. It can improve your workflow, improve the service you offer clients, and help you earn more for your freelance work. It can even be used to improve your creativity.
And if you’re time-tracking with Solo, our time-tracking software gives you the added ability to create invoices directly from your timer-entries, which frees up even more hours you can then use for freelance work.
So it begs the question, why on Earth do some people who work freelance still insist on charging clients on a project basis?
What they should be doing, is using time-tracking software to help them charge by the hour and gradually increase their income with hard data.
This blog post is brought to you by the creators of Solo; your freelance wingman. If you'd like to contribute to the blog, contact us on hello[at]wearethrive.com.