Guest Post: Why All Freelancers Should Get Methodical About Time Tracking
Today’s guest blog is by Joana Ferreira. Find her at JVF Marketing or connect with her on LinkedIn and Instagram.
Apart from the challenge of finding clients, I strongly believe that one of the most difficult things about freelancing is knowing what to charge. Although it gets easier, that feeling of uncertainty doesn’t ever completely go away.
It always feels like you risk getting it wrong. Price too high and you risk losing the opportunity; too low and you risk working for free.
There are several ways of calculating your pricing, the most common involve a mixture of comparison against market rates or other freelancers’ rates, a calculation of time needed to complete the task/project multiplied by your daily/hourly rate, a dictation by the client of what they’re willing to pay, or just a wild guess, cross your fingers and hope it all works out!
I’ve been freelancing for almost 6 years and I don’t pretend to know everything, but I know that pricing is an area that I’ve worked hard at improving year on year, and that I’m getting much better at. And I’d love to share some of what I’ve learned with you in the hopes it will make this challenge just a little bit easier.
My preferred method of calculating freelance writing pricing
In my experience, I believe that clients are paying me for two things: my skills and my time. The funny thing about these two factors is that generally speaking, the better your skills get, the quicker you can get things done, in other words the less time you need to do your job.
This is why I’m not a big fan of the ‘hourly rate’ situation. I think it cheapens what we do, and it undervalues our skillset. I know that when I first started doing website audits (one of my most commonly performed tasks) it could take me several days to get through it. Now that I’ve done countless audits, I’ve created shortcuts, templates, I know exactly where to look and what to look for, it probably takes me one day, maybe two. If I were to charge by the hour for this, I’d be losing money, or I’d have to charge an exorbitant hourly fee that the client would probably not agree to.
My preferred way of pricing is on a fixed fee. In other words, we agree on a precise scope of work and a list of deliverables, and I price these at a fixed price. This could be a bundled price, useful for those clients that require the same thing every month, or on a price per item, allowing the client to scale up or down as required. So, how do you calculate what that fixed fee should be? Enter: freelance time tracking.
It’s not rocket science, but it is certainly eye opening. When you can clearly see how long everything takes you it becomes much easier to understand the overall time and effort involved, making it simpler to calculate your costs. Let me explain.
Why I love time tracking as a freelancer
I first started tracking my time because I had to. I was getting paid by the hour for a client and they wanted a report of what I'd spent my time on. (I know I said I don’t like this method, but this client only worked this way, so I had to go with the flow). So I downloaded Toggl and started tracking time.
Toggl is a free time tracking app that allows you to set it up the way you want to. You can set up clients, projects per client, and then tasks per project. So you can get really granular on what exactly you're tracking. You can then view reports and get a birds eye view of how many hours you tracked, for which client, which project and which task.
As soon as I sent my first monthly report to this client, I quickly realized how little I actually knew about how long things really take. I mean REALLY take. For example, with this client, I was doing mostly SEO strategy, which involved a mixture of research, data analysis, writing briefs, editing content, writing reports and so on. But because I was getting paid by the hour I was also tracking the time I spent responding to emails, slack messages, clickup tasks, formatting documents, answering ‘quick calls’. Have you ever thought about how much time you spend each month on all of those little ‘5 minute’ tasks? Well, let me tell you it’s pretty eye opening once you see what it all adds up to. Those minutes equal hours… i.e. hours that you need to be getting paid for. Hours that you need to take into account when pricing.
This got me thinking about what else I was spending time on and how long things take me. So I decided to start tracking everything I do for every single client and for my own business too.
How I use time tracking to improve my freelance pricing
Within Toggl, I set up all my clients and then added projects for each. You might only need to set up one project per client, but it really depends on what you do for them. For example, for one client I was working on a new website for them and also content strategy, so I set them up as two separate projects. Most importantly, I also set myself up as a client and then created projects for marketing & sales, networking & learning, and admin. It’s not enough to just know how much you spend on ‘paid’ work, you also need to know how much time you spend doing ‘unpaid’ work - because your pricing should factor this in.
I love looking at the reports and trying to make them more useful every time. Here’s the key information I like to extract:
How much time do I actually spend per client per month?
How much time do I spend on specific tasks?
How much time do I spend on unpaid work per month?
How much total time am I working every month vs. my monthly revenue? What does that look like as an hourly rate?
That last question is key. And it kind of changed my perspective on how I was pricing my time and skillset.
When I worked in an agency, we had to factor in all costs associated with delivering our work to the client, including finance, admin, legal and of course the fixed costs such as rent, electricity etc. That’s why businesses add a markup. Why was I not applying that same logic to my own business? I was creating a price for the time it takes me to work on the deliverable, without factoring in the time spent on admin, finance, account management, and any other costs. By the time I added up all the hours I was working and divided that by my monthly revenue, my actual hourly rate was pretty miserable.
This was just the beginning. I started getting really into it and wanted to see what else I could learn. These three things helped me in my next steps:
Who are my most profitable clients?
Who are my least profitable clients? i.e. the time suckers!
From start to finish, and taking into account associated time, how much time on average do I spend performing repeatable tasks?
Knowing who your most profitable clients are is key: this is your sales target and target audience. You want more of those. It means you're charging the right amount of money for your time and skill. I set myself the goal of trying to replicate what I was doing with these clients and finding more just like them.
Those that are sucking up your time for little profit are those you need to make decisions on. Do you raise your prices? Reduce the scope? Let them go? I found that one of my ‘favorite’ clients fell into this category. And it made me realize I was over-servicing because I really liked working with them. I didn’t want to stop working with them, but as a business owner you can’t deny the data that’s right in front of you.
So, I decided to just set boundaries. Instead of arranging multiple calls, answering every question, being at their beck and call for whatever they needed, we agreed on a dedicated time each month where they’d have my undivided attention for that time only, giving me time to dedicate to other clients. I would never have done this if I hadn’t seen the data for myself - I was being led by my emotions rather than thinking practically.
Finally, knowing how long things take helps you get clearer on pricing. You can standardize your prices and create bundles or packages, knowing you've taken into account all possible factors, including admin, finance, account management, research, education and all other things you need to do to perform your job to a high standard that don’t fall into the category of that deliverable.
Key takeaways
It’s not an exact science, and practice makes perfect.
My biggest advice to you is to just start doing it, stick with it, and try to make this data more and more useful in helping you make decisions.
Time tracking has been immensely helpful for me. Not just in understanding how much time I need to charge for, but in building up my confidence to stand behind my pricing. We all get those moments of self doubt and fear the reaction we might get when we share a quote with a potential client. However, this knowledge really is power. If a client raises their eyebrows at your quote, you can confidently explain all of the associated tasks that are required to do it. Or if a client requests the same work for half the price, you can confidently walk away knowing that it really isn’t worth your time and a better opportunity might be just around the corner.
I hope you found this article useful and that you'll give time tracking a go. If you have any questions or just want to talk further, add me on LinkedIn or send me an email and let's chat!
About Joana Veiga Ferreira
Owner of JVF Marketing, Joana is a passionate marketer specializing in SEO and content strategy. She works with small and medium sized businesses around the world, helping them gain visibility online, attract the right audience, and reach their goals. An avid traveler and yogi, she’s been freelancing since 2018 and loves connecting with other freelancers from around the world to share knowledge, experiences and stories!
Email: joanaveigaferreira@gmail.com
Website: https://www.jvf.marketing/
LinkedIn: https://www.linkedin.com/in/joanaveigaferreira/
Instagram: https://www.instagram.com/joanavmarketing/