I’ve always been a fan of being disciplined about time tracking in my consulting work. Whether we like it or not, the hour is the universally accepted unit by which the cost of consulting services is measured. I’ve seen and heard arguments that advocate strongly for consultants not using time-based billing. The theory is that what should be important is the value of the work to the client, not how many hours of effort it took to produce. There’s a logic to that — not everybody works at the same pace or has the same experience. If we really put value only on the number of hours worked, the highest price for a given project would always be from the slowest, least experienced person. Of course, it usually doesn’t work out that way. That slow, inexperienced person will generally have a lower rate per hour, often levelling the playing field price-wise.
The thing is, even if the novice slowpoke does have a lower rate than the efficient veteran, the two do not represent an equal value proposition. Given equal cost, even if the less experienced person puts in far more hours, chances are that the experienced person will bring greater value by understanding the problem at a deeper level and having a greater wealth of precedents to draw on. Hence their higher hourly rate.
Tracking your time is eye-opening, and often not in a good way.
I mostly provide pricing by the hour, because that’s what clients know and want. But before I start breaking things down for a proposal I will make an initial estimate of what I think the project is worth, based on my experience. Once itemized by phase and task, I’m often not far from my initial guess. Why? Partly lots of experience, but also — to circle back to the first sentence — partly because I rigorously track my time using using an app (OfficeTime). I cannot overstate how important that habit is to long-term success as a consultant. Most people, in my experience, are actually pretty bad at estimating how much time they’ve put into something. Tracking your time is eye-opening, and often not in a good way. But when you know what hours you’ve put into a project, it informs the next quote or schedule, and trains you to be more and more accurate with your future proposals. That leads to happier clients who ultimately appreciate the consistency in your estimates of time and dollars. And happier consultants that are getting fairly compensated for the value they provide.
If you have any thoughts or questions about time tracking, please track me down on Twitter (@intudes), or leave a comment below.