Why Your Rates Are Painfully Lower Than They Should Be

When you take on a new project, you take on a very specific per-hour rate – either an agreed upon rate ($40/hr, and I told the client it should take about 10 hours) or a per project rate ($400, but I think it will take 10 hours, so that’s $40/hr). But for far too many freelancers, that rate is never, ever achieved. In fact, most will face the reality that they make far less than their intended rate. Why so? Because a) they fail to estimate the scope of the project correctly, and b) they don’t get honest with how long things really take.

The Accidental Lies We Tell Ourselves

Take web design for an example.

  • You think back to the last site you made and think, “Hell, I did that in 10 hours. Easy peasy!”
  • You tell Mr. Client it’ll be $400.
  • You get to work.

Then reality sets in.

  • Mr. Client’s site was a little more complicated than yours was, so it takes longer to code.
  • Mr. Client isn’t living in your head like you are, so you have a lot of back and forth email / phone calls / web conferences to get clarity on stuff.
  • Your computer keeps crashing for no good reason. It didn’t do that last time.

Suddenly 10 hours comes and goes. So does 15. Soon, your rate-per-hour has taken a huge turn for the worse.

The Easy Way To Make Sure This Never Happens

You want an easy way? Get a magic wand. There is no easy way – delays, setbacks and unforeseen events are just a fact of life. But they don’t have to affect your profits if you learn to become a better estimator of how long things really take.

And the way to figure out how long things really take is to track how long things really take.

That means when you sit down to work on a project, keep a daily log and track how long you expect things to take and how long they really do take. Most people will never do this because it’s (gasp!) work. Then they moan and complain because they are working too hard to make a living. Don’t be one of these people.

Tracking Time Is Your Way To Stress-Free Profits

Keeping a daily log is a magically delicious way to make sure you don’t water down your rates on upcoming projects, because of the power of awareness:

  • You promise a project for $400, thinking it should take 10 hours (yay, $40/hr!)
  • Harsh reality comes a knockin'; the project takes 15 (and you track this)
  • You smack yourself, realizing you only made $27/hr after all.
  • Next project comes around – but this time your wiser, wants to make $40/hr self says “That’ll be $600,bub.”
  • The project takes 15 hours, though you tried to do it in 10. But you still win!

It’s not always this cut and dry, but the more you track how long things really take, the more you realize that a certain amount of wiggle room has to be factored into all projects. And by tracking your results, that estimate becomes more accurate over time.

Which means you know to adjust your project details/rates so you’re getting the pay you want, and you win. Huzzah.

Now start trackin’, boss. Your rates depend on it.

Dave

(For more rockin’ good tips, head over to Dave’s productivity blog and enjoy.)