Keeping up with all the tasks of freelancing in any field can be almost exhausting. At the end of the day, it is sometimes hard to know exactly how much you made in profit on a project. Fortunately, there area couple of free (assuming you already have Excel) tools that can help you clearly see which clients are worth keeping and which ones might be better off with someone else. Over time, you should be able to increase the bottom line of your profits to the hourly rate you deserve to be paid.
I discovered Toggl over a year ago and I can’t begin to tell you how this site has simplified my life. Start for free, as the basic package may be all you need, especially if you’re just getting started. However, they also offer a Pro version that will allow you to invoice customers and produce advanced reports. As your business grows, time savers like automatic invoicing can free up more time to earn an income. If it’s just you, as of August, 2012, the professional version is only $5 a month. You will even get a free 30-day trial of the software. In addition to saving time, an invoice from Toggl can show the client you aren’t overbillin on time.
Let’s assume you are going to use the free version of Toggl with the more basic reports. Then, you probably want to know how much you’re making per hour on each project. Here are the steps that will get you there:
- Set up a client and project on Toggl.com. You should have separate clients for each client rather than just a category called writing. This will show you where your time sucks are and allow you to cut those and add clients who pay you the per hour rate you want to make.
- Track all time spent on a project. If the client phones, open Toggl and track the time spent talking and offering advice. If you work on the project, track the time spent. A word of caution here… work ONLY on a single project. It isn’t fair to clients to charge them non-stop while you hop around and work on additional projects. Also, resist the urge to check e-mail and social media while the Toggl timer is running. Be fair with your clients and they will retain you and recommend you to others until you have to eventually turn away business.
- Open Excel and create four columns: Client; Project; Amount Paid; and Hourly Wage.Client
Just under “A” put the word “client” and bold it. Skip down to the next line and put the name of your current client (repeat as necessary).
You may be wondering why you need a Project category, when you already have a client category. If your client has you do multiple projects, and most will, you want to track it and be sure you’re being paid fairly over time. One project might not pay as much, but the client may pay you what you deserve most of the time. On the other hand, the first project might pay well and the rest lousy. These are points you need to track and know. Under column “B,” put the word “Project.” Skip down a line and put the name of the project, such as “Newsletter.”
Under column “C,” put the word “Amount” and bold. Skip down a line and put the total amount you were paid for a project, such as “$75.00.” A tip that can help with this column is to highlight all the cells under the word “Amount,” right click on the highlighted cells and choose “format cells” and then choose currency.
This is where you get to figure out some formulas that will give you your hourly wage. Excel formulas can be complicated, but in general you must always start with an = sign. You then must tell Excel which columns to pull the info from (both letter and number) and what to do with that info. So, to get your hourly wage, you need to divide the amount paid by the number of minutes you actually worked (convert to minutes not hours and minutes for easiness) and then times that amount by 60 (number of minutes in an hour). This will give you your hourly rate whether you worked only 23 minutes or you worked 2000 minutes. So, in column “D” write the words “Hourly Wage.” Skip down a line and then type in this formula: =C2 / D2 * 60
- To repeat with additional clients, simply highlight and copy the cell with your hourly wage and paste into the cell under. This should automatically convert to the next cell down and the formula will now look like this: =C3 / D3 * 60. If you have trouble, feel free to e-mail me.
What to Do with the Info
Now that you have the information you need to see how much you’re truly making per hour, you have to ask yourself if you’re being paid a fair rate. $5.00 and hour is not fair. $18.00 might be a fair wage per hour, depending upon your experience and the rates in your area. The more experience you have, the more you should get paid per hour. Are you making what you’re worth? Is it time to set some clients free? Only you can decide.