Some firms employ billable hours, a form of value-based pricing that tracks how much time is spent on each customer project.
If small business owners in the creative and content industry don't fully grasp billable time and what they should be billing for, they run the danger of undercharging for their services. It's understood that maintaining happy customers is still important, but getting paid well will keep you motivated and secure your company's survival. You can use financial accounting software to maintain all billing.
What exactly are "billable hours"?
Any time spent working on a client's delivery is considered billable time. Tasks may include but aren't limited to responding to messages, making edits to files, and taking messages.
According to the terms of your contract with the customer, all time spent working on the client's project is considered billable.
For instance, as a freelancing graphic designer, you might charge for the time you spend coming up with logo concepts, communicating with clients to determine their needs, and making adjustments to initial designs.
When and how to set billing rates
Before meeting with a client to discuss your billing rates, be sure you have done your homework.
- If you want to know the going rate in your service industry, you can either ask around to find out.
- After deciding on a price, it's important to weigh it against the quality of the service you'll provide.
- To determine your hourly billing rate with the help of financial accounting software, start with the total amount you wish to make and go back until you reach the lowest possible rate.
- Be as honest as you can with your customers.
How Billable Hours Are Calculated
To manage projects effectively, having a good idea of how much time you will likely spend on each step is crucial.
Here are the four stages:
- Document everything you did
- Create a timesheet
- The project should bill out time
- Time spent working out
Listing all activities:
Providing a time estimate for delivering the client's project requires first identifying every possible action or process needed in doing so.
Keep a time log:
A client's project's every action can be recorded using a time-tracking tool. Tracking the amount of time spent on each project is easy with the help of apps like Desktime, Hubstaff, and Clockify.
Manually keeping a time record is possible with the help of a spreadsheet that includes sections for the client's name, a description of the work done, the date, and the amount of time spent on the project.
Using a time tracking tool is recommended to avoid losing a great deal of time that may be put toward more important business tasks.
Estimate project-based billing hours:
When working on multiple tasks for the same customer, tracking how much time was spent on each is important. This will help you rapidly identify areas where your pricing doesn't adequately reflect the value you're providing.
Add up all the time you've spent:
After the project for the client is complete, go back through the time log and total up the time spent on each task.
Closing Remarks
The use of billable hours is advantageous for the freelancing economy. Professionals like copywriters, artists, business advisors, and lawyers will likely use this pricing structure.
The use of billable time for clients is discretionary and should be made in light of the project's current state. Since Susan.one offers financial accounting software by which you efficiently monitor your working hours, increase your output, and bill your clients; why wait any longer to try it?