Track Time and Make an Extra $350,000
Intro
Time tracking is an afterthought for many freelancers – they struck out on their own to escape the corporate grind and do what they love, not think about business processes & bean counting. So why then, should you make time tracking a subject of primary concern? In this article we’ll explore 3 key reasons to track your time and how those reasons can add up to $350k or more in extra cash.
Time = Money, for you and your clients
If you’re freelancing on an hourly basis then time spent is money, no two ways about it. That being the case you owe both yourself and your client a good accounting of both what time you’re spending and how you’re spending it.
In the moment, knowing that you’re (literally) on the clock has significant benefits with regard to keeping you on task. After the fact, having quality records of time spent goes a long way to building trust with your customers and showcasing the hard work you’re doing on their behalf. Trust is how one sale turns into a repeat customer and repeat customers is the best way to keep your book of business full.
Your brain is the worst clock around
The underlying biology & psychology that drive our perception of time in the examples above also influence our perception of everyday events, just a bit more subtly. Our brain doesn’t actually count seconds and minutes (who has that kind of brain power to spare?), but rather focuses on events that have transpired – then it attempts to estimate the amount of time that passed across that set of events. A huge number of factors ranging from the number of events that have transpired, the quality of our memory of the events, our current mood1, and even our age2 impact our perception of how much time has passed.
Recognizing our own lack of objectivity with regard to time (and likely agreeing that our mood shouldn’t impact what our client pays), it seems obvious that we shouldn’t be tracking time in our head. A system *cough* like Chronos *cough* takes out the guesswork, removes biological biases, and – best of all – never gets moody!
Now let’s pay some lip service to this article’s title and do some quick back-of-the-napkin math to drive the point home. Let’s say you’re a freelance UX designer named Jimmy who works 5 days a week and charges $100 an hour. If Jimmy under-estimates time spent by as little as 20 minutes/day then he’ll miss out on $346,666 over the course of his career! I don’t know about you, but I could definitely use an extra $350k in my life!
If you want to improve, you have to measure
Okay, so we’ve established that time=money and tracking time objectively is not a forte of human beings. Beyond the immediate concern of billing clients accurately, however, there are a host of more forward-looking reasons to systematically track your time. Tracking time is essential if you want to become more efficient, set proper expectations with future clients, and make high quality business decisions in general.
First let’s look at efficiency. Having data on your time spent, especially when you have meta-data against which to analyze it (Eg. how the time was spent, the type of project you were working on, et cetera), allows you to identify where you can be more efficient.
Now let’s look at an example – we’ll use our hypothetical UX designer, Jimmy, again. Let’s say that Jimmy uses Chronos to track his time – he has two project types that correspond with the services he sells, “UX Audit” which he sells at a flat fee and “Mobile App Design” which he sells as hourly projects. When Jimmy tracks his time he categorizes it so he knows how it was spent – in the case of UX Audits his time categories are “Background Research”, “UI Review”, and “Report Writing”. When it comes to Mobile App Design, his time categories are “Background Research”, “Wire-framing”, “High Fidelity Designing”, and “User Testing”.
First of all, let’s see how Jimmy might use the data he collects to become more efficient. When reviewing a summary of time tracked against UX Audits (something that can be easily done in Chronos by looking at Smart Estimates), he can see that he spends an average of 5.2 hours on Report Writing out of the 10.7 hours that an average UX Audit takes him. Knowing this, he decides to work on templatizing his report so that each report doesn’t take him as long. In Chronos he’s actually able to track the impact that the new report template has on his average Report Writing time. I won’t rehash the whole time=money & 20min/day = $350k over his career deal…I think you get it!
Second, let’s take a look at how time tracking can help Jimmy more accurately set expectations with future clients. In my own research during which I’ve interviewed countless freelancers, I’ve found that over 60% of projects are underquoted – which is to say that the project ended up taking a greater number of working hours than the freelancer originally estimated when speaking to the client. This phenomenon leads to countless awkward “Hey, I’m going to need some more money to finish this…” conversations with clients and the spending of unpaid hours on the part of freelancers. Setting poor expectations prior to starting a project is a great way to lead to dissatisfaction all around. Jimmy, however, can avoid this pitfall using his summary time tracking data. Using that same report in Chronos, Smart Estimates, he can see how long an average UX Audit takes him – even down to how long he generally spends on research, UI review, and report writing. That being the case, he can use that average as a starting point for creating an estimate. At Chronos, we’ve found that freelancers who use the data in Smart Estimates cut down on underquoting by more than 50% – after covering all the flaws with our innate perception of time, it seems obvious why this would be the case!
Finally, let’s just look at an example of a scenario in which tracking time helps with general business decisions. Let’s say that Jimmy’s book of business is full and he’s starting to turn away projects by necessity. He starts looking for contractors who might be able to help with his workload and finds someone willing to do background research for UX Audits in exchange for a flat fee. Because Jimmy tracks his time, he can make a data-driven decision here. Based on his hourly billing rate and the average amount of time he spends doing research for each UX Audit, he can actually calculate the dollar value of that work. If that dollar value is higher than the flat fee charged by the contractor, then he’ll make more by outsourcing the work and re-allocating his time. In a matter of minutes he can confidently make a decision because he tracks his time.
Conclusion
Time = Money if you’re a freelancer. Our biology makes us really poor time keepers as human beings, so utilizing a time tracker has big benefits. Time tracking solutions help us crush our work by improving our mindset, eliminating our inherent biases in our perception of time, and creating confidence on the part of our clientele. Over the course of a freelancing career, these small differences can create massive impact. In our one example, 20min/day of time tracking inaccuracy led to $350k in lost revenue over time. When you start to account for improved accuracy in estimating projects, improved efficiency, and other business decisions, then that $350k could easily become a seven figure number.
Time tracking is important, but it shouldn’t be hard. That’s why we made it simple and free with Chronos. Why not give it a try?
References
Smart time tracking for freelancers.
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