My wife and I sat down a while back and added up our bills, dreams and goals for our family – from a financial standpoint. We added up the figures, including EVERYTHING that goes out monthly – hosting expenses, gym fees, the kid’s classes, insurance, gasoline, coffee, shoes, etc – and came up with a total amount that I must grab monthly. Then, we tacked on what we’d like to have for savings and extra money. Then, we took that total, divided it by 20 days (the work days in every month), then divided that by my hourly rate.
The cool thing – I only need 4 hours a day to live comfortably, put money in the bank, and have extra each and every month.
Listening to Dark Side of the Moon 5.1 times.
Watching Spinal Tap twice.
Not bad, huh?
The uncool thing – I need 4 hours a day that I can bill.
Doesn’t sound like much, but I’ve found it kind of difficult to truly bill out 4 hours a day at my full rate. I won’t tell you what I charge per hour, but I can tell you that I’m neither the most expensive guy, nor the least.
There are a number of things that kill my time – and things that I need to start charging for:
- Answering emails
- Answering the phone
- Sitting around and “ideaing” projects while not actually working on them physically
- Instant messaging
- Superfluous meetings
- Minor tinkerings
- Pulling stuff out of archives to send to clients (reprints or what-not)
- Piddling around*
- Playing video games*
- Watching movies*
- Organizing my iTunes library*
- Playing guitar*
*These are things I just need to eliminate during the work day. But – they help my sanity (or what’s left of it.)
Billable hours are the lifeblood of a freelancer, as well as the large agency. If you find yourself not making enough money, you need to examine a few things. They’re hard questions – but you MUST answer them in order to make your business liquid and profitable.
- Am I charging enough?
- Am I wasting too much time?
- Am I giving my time away?
- Where is my time going?
- Am I genuinely productive in my work day?
- Am I spending too much time doing stuff that I want to do and not enough time doing billable projects?
- Am I BILLING enough of my day?
For me, it’s Yes, Yes, Sometimes, Too Many Places, Sometimes Yes – Sometimes No, Yes and No.
What are your answers?
Figure out your time – figure out how much you need to bill out EVERY SINGLE DAY. I suspect that a lot of you are like me, and you have plenty of projects – but you don’t spend enough time daily on BILLABLE work. If you know how much you need to bill out every day, that gives you an easily viewable finish line every day.
If you come up short, consider restructuring your day to meet your hourly billable need.
Doing the math was a real eye-opener for me. It made me realize that I didn’t need to raise my rates or drum up bigger and more projects – it made me see that I need buckle down and get a certain amount done every day – from an hours standpoint. It made me examine where the roadblocks were, where my productivity was going, and what I needed to change in order to meet my nut.
The formula: MONTHLY EXPENSES/20/HOURLY RATE = Hours Per Day Needed.
Now – if I can just figure out how to double my rate and halve my time, I’ll finally have all the time I need in order to actually learn to play the entire Jesus Lizard catalog on my acoustic guitar…