How do I track my hourly rate when I’m billing by the project?
Are you using FreshBooks to send out invoices for projects with set flat fees? Sure, it’s been really easy to create your invoices and shoot them over to your clients but we wanted to share a pro tip with you about how to track your actual hourly rate, even if you bill per project. If this is something you haven’t ever drilled down into, here are two great reasons to find out your hourly rate:
#1 - You’ll put a value on your time
Here’s the scenario: you charge a flat rate of $1000 for building a wireframe for a website. Your invoice will simply have a line item describing what the service is, and the flat rate amount for that service. You think this will take 10 hours, therefore your hourly rate is $100/hour. In reality, it took 20 hours, effectively halving your rate.
If you didn’t track your time, you don’t know how much you’re spending on the project. If the value of your work is $100/hour, you should really be charging $2000 for the project. Recording your time, even if you’re not billing for it, allows you to run reports to give you more accurate detail on how you’re spending your time.
#2 - You’ll become a better estimator
Logging your hours on projects will build up historical data to reflect on and help evaluate your business. From these numbers, it will give you a starting point on deciding what future projects should cost, and if your clients ever object, you can use it as ammo to justify your cost.
Try it now - how to track hourly rates for project-based work?
BEFORE Billing, go to your Time Tracking Tab>>Projects subtab and create an INTERNAL project, with a list of relevant tasks you will be working on. Don’t forget things like administration or work that may not be directly related to the project. You’re still working, so record it!
Start logging your time in the Time Tracking tab. You can even use the Timer, which can make this process more accurate.
Invoice the same as usual at the end of the project - create a line item, description of the service, cost and quantity.
Step 4 At the end of the project, go to Reports and run a Timesheet Details Report to see what you’ve done!
Tried this? Let us know how it went!