Tracking time when you don’t charge by the hour

John Reeve | October 2nd, 2019 | ,

Tracking time when you don't charge by the hour

Many agencies prefer to bill their clients a flat fee based on the value of the work being created. Whether it’s designing and developing a web site or creating an ad campaign, the scope and price are discussed and contractually agreed upon before the work begins. And while time tracking isn’t required if you don’t charge by the hour, it is a valuable tool that can help the agency become more productive and profitable.

The goal of incorporating time tracking into your project management workflow is to create a feedback loop. It starts with predicting how much time a project will require, and then tracking the actual time spent doing the work. The last step is to apply what you’ve learned to the next project, and repeat the process. We call it Predict, Track, and Learn, and it’s a powerful methodology that will answer two important questions.

Are we productive?

If productivity is lacking the time tracking data will reveal it. The problem might be one team member not doing enough, or the project chewing up too many hours the week before deadline. Whatever the problems are, time tracking tools are the key to finding inefficiencies.

There are a number of ways you can look at the data and gauge productivity, but, how you interpret it is going to depend on your team, your projects, and your workflows. The important thing is to have the data in the first place, then spend some time studying your data before you start drawing conclusions from it. The patterns that start to emerge will surprise you, and hopefully help you in the long run.

Are we profitable?

Even if you don’t charge by the hour, you still need to bill enough to pay your team and other expenses. If you are paying your team a fixed rate, such as a salary, the math for gauging profitability is relatively simple. However, if you are paying team members hourly, too much of their time can chew through profit if not watched closely. Time tracking tools help by keeping track and placing a value on everyone’s time, regardless of how they are getting paid.

If the project expenses are exceeding the fixed fee, the project is not profitable. You could make the argument that some projects are going to be unprofitable, and that’s okay as long we have enough profitable projects to make up the difference. I would counter that, and argue that adopting time tracking tools can make every project profitable. So, why break even at the end of the year when you can come out ahead each month?

What can we do better next time?

The last step is to apply what you’ve learned to your next project. That could mean raising your prices, or bringing more people on to the team, for example. Time tracking tools provide a deeper insight into how the next project will unfold. There are no guarantees, and some projects might still go off the rails. But, the likelihood of that happening is greatly reduced when time tracking tools are in play.

Even when you don’t charge by the hour, time tracking tools empower you to predict, track, and learn from each project, and make informed decisions on the next one. With each project, your estimates will be more accurate and require less guesswork. Your team will be more productive, and your projects more profitable. The efforts required to adopt time tracking tools might seem overwhelming in the beginning, but the long term benefits are well worth it.

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Intervals Blog

A collection of useful tips, tales and opinions based on decades of collective experience designing and developing web sites and web-based applications.

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Intervals is online time, task and project management software built by and for web designers, developers and creatives.
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John Reeve
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John Reeve

John is a co-founder, web designer and developer at Pelago. His blog posts are inspired by everyday encounters with designers, developers, creatives and small businesses in general. John is an avid reader and road cyclist.
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Jennifer Payne
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Jennifer Payne

Jennifer is the Director of Quality and Efficiency at Pelago. Her blog posts are based largely on her experience working with teams to improve harmony and productivity. Jennifer is a cat person.
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Michael Payne
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Michael Payne

Michael is a co-founder and product architect at Pelago. His contributions stem from experiences managing the development process behind web sites and web-based applications such as Intervals. Michael drives a 1990 Volkswagen Carat with a rebuilt 2.4 liter engine from GoWesty.
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