Many job seekers are thrust into the world of freelancing by default, typically after they have been laid off from a 9-to-5 job and they are not able to find other regular employment positions. When managed properly, freelancing can be more rewarding, fulfilling, and lucrative than a routine job. The key to success as a freelancer is to learn how to monetize your time.
When you have a regular job, your employer basically pays for your physical presence. The employer assigns certain tasks to you and you complete those tasks within some deadline and usually without tracking how long those tasks require for fulfillment. As a freelancer, you will still have deadlines and tasks, but your stock in trade is your time, rather than your physical presence. You will typically provide your services for clients according to the terms of a “time and materials” or a “fee for service” contract, or some hybrid of both. Tracking your time under any form of contract is critical.
The Time and Materials Contract
Under this form of contract, you will invoice your client for each hour that you devote to working on his projects, and you will add a line item to your invoice for approved expenses for materials that you used to complete the project. Many clients will ask for an estimate of how much time you expect to spend on each project. If you provide an estimate that is too low and you later invoice your client for an amount that is substantially higher than your estimate, the client will often balk at paying the full amount of your invoice. You can avoid this situation both by providing realistic estimates of how much time you will need to complete a project, and by tracking and monitoring your time while you are working on the project. The trick is to track your time continuously while you are working on the project, rather than waiting until the end of the project and adding up all of your time only to be surprised by how much time the project actually required.
The Fee for Service Contract
Flat fee for service contracts can be either very lucrative or tragically unprofitable. When you agree to complete a project for a flat fee, you are committing to that fee regardless of how much time the project requires. You might not think that you should monitor your time when you are providing services on a flat fee basis, but success as a freelancer requires you to track your time even more carefully when you are working for a flat fee. You might underestimate the amount of time that will be required to complete your first few projects, and write off the extra time as a learning experience. As you acquire more clients who ask for flat fee work, that experience will enable you to provide more accurate quotes. You will no chance of providing an accurate quote, however, if you do not have correct information regarding how much time you spent on similar projects.
Some of your clients will agree to a time and materials, but they will place a hard cap on the total amount of time you are allowed to invoice. Others might want a flat fee contract with a rider that gives you a bonus if you deliver the product of your services at a lower-than-budgeted rate or well in advance of a due date. In all cases, you need solid information about how much time you have spent on previous similar projects and on the time you devote to each client’s ongoing projects. The old adage that “time is money” is the controlling principle in freelancing situations.
CloudBooks has simple apps and tools that will allow you to track and record your time for all of your client projects in real time, as you are working on those projects. Please contact us for more information on how we can help you establish a system to track and monetize your time for a successful freelancing career.