How to become an expert at estimating your time

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In an earlier article I wrote for Millo, I suggested that the right time to use a flat fee over an hourly rate was anytime and every time you are asked by a client to provide an hourly cost estimate for a project.

I also noted the difficulty of estimating time and the costs tied to that time. Not even the most seasoned freelancer or agency gets it right every time, and when it’s wrong, it’s usually an underestimate.

Part of the solution is to turn that estimate into a flat fee. You can learn more about why that is by going to my previous article.

But there’s more to the solution than just that. You also have to nail down your time and costs as closely as possible, to come up with an estimate that is — as they say — “in the ballpark.”

Sidenote: Once you finish, read how 4 freelancers built recurring revenue models that changed their business. You'll love it.

Keeping prices fair for both sides

I mentioned in the previous article that three things have to happen for a flat fee to be “fair” to you, the creative freelancer. One of those three things was for you to become skilled at estimating how long a project is going to take.

But how do you do that? How do you become an expert at estimating time spent on a project?

Why estimating time is still important

Before I get into the “how,” I’d like to talk more about the “why,” especially since more and more freelancers are being encouraged to set prices based on “value” rather than time spent.

Yes, value needs to be added into the equation when figuring out your final fee. Charging what you and your project are worth is one of the other two things that I believe must happen when creating a flat fee for a project.

But I don’t think the time involved on a project should be ignored, for a couple of reasons:

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1) The client’s time is valuable, but a freelancer’s time has value, too

While a value price takes into account just how valuable a client’s time is and how that translates to the worth of the project, when it comes right down to it, our time has value, too.

As an example, let’s say you charged $100 an hour when you first started as a designer. Then, as you get better and faster at doing good designs, you realize you are being penalized for being quick. So you start to charge clients fees that are based on “value” instead of time.

But still, it’s all related. Just because your flat fee is based on value, doesn’t mean your time has lost value. In fact, it’s gained value.

For example, if you are a photographer, you know that you can change the ISO, the aperture, and the shutter speed of your camera, and, if you do everything right, you’ll still get a photo that is exposed correctly.

In my opinion, it’s no different with price. If you are charging by value, by dividing that project’s value-based flat fee by the time you spent on that project, you’ll discover what your hours were worth for that project.

Consider this your “value-added” hourly rate for such a project.

Let’s say you discover, with value added in, you are making $200 an hour rather than $100. Your time still has value. It’s just that it’s now more valuable than it was before.

So, for myself, I’ve found that a quick way to create a foundation for a value-priced quote — and a way that I can feel really good about it — is to have a fairly accurate idea of how much time a project is going to take, and then multiply that time by a “value-added” hourly rate.

In this article, I’m not going to talk about what specifically adds value to a project. There are many factors involved, and Millo has a ton of articles on the subject of value-based pricing (a very good one is a post by Mindy Lepp, and I encourage you to check it out).

But — in light of value-based pricing — I believe potential time spent on a project is still an important consideration when formulating a fee.

2) Scheduling

Your clients don’t just want to know the price. They also want to know the “end date.” They want to know when their projects will be finished. And frankly, you should want to know that, too.

The old saying, “Fail to plan, plan to fail” comes to mind.

If you want to handle as many clients and projects as you possibly can, you need to know how long the projects are going to take. As such, you also will know how you can work around a project, how to work with other projects, when to delegate projects, and when to start hunting for more projects.

You have to manage your time, and you can only do that properly if you discern fairly accurate time estimates for your projects.

How to create “in-the-ballpark” estimates

The steps I’m about to present will help you get your estimates as close to reality as possible.

If you can get in the proverbial ballpark with your estimates — perhaps no more than 10 percent over or under the total amount of actual hours spent — you’ll be on the right track to developing quotes that both you and your client can live with (and more about that at the end of this article).

Estimating time is not difficult. It’s actually quite simple. But both diligence and discipline are involved for the best results.

Track your time

If you already charge by the hour, I have to assume you are tracking your time. But I might be wrong. I’ve known creatives who use very sloppy methods of keeping track of their hours, including not tracking their time at all (despite claiming to charge by the hour). Then, when it comes time to invoice their clients, they fly by the seat of their pants and guess the number of hours spent.

Maybe you handle projects in a similar way. If so, STOP. It’s not serving you or your client well. At its best, you’re getting underpaid. At its worst, you are overcharging. Either way, there’s the ethical issue of being disingenuous.

Or, maybe you gave up charging by the hour and now you only charge flat fees, so you don’t bother to track your time anymore. That’s a mistake too, for the two reasons already listed.

If you want to be realistic on estimates for future projects, you must track your time on every task you do on your present projects. That’s the only way to get a real sense of how long your projects take.

Time tracking is one reason I adore FreshBooks. Its timer leaves little room for error. Click a button and BOOM! The time spent on a task has been logged for that project. Quick and easy — I love it!

But, however you decide to do it, track your time.

Use time as your base

When you are first starting out as a freelancer, you obviously don’t have much experience and can’t look back on too many projects, but that’s why you have to track your projects from the get-go. As your experience builds, your projects’ timelines will emerge, and you’ll get a better sense of how long certain tasks take.

If you’ve completed several similar projects, you can combine their times and divide them to see the average amount of time you spend on such a project. This is how you create a time base for your estimates.

Research the results

At the end of a project, always go back and analyze the results of your tracking. Check how much time the project took. But then, go deeper. Ask:

  • Which tasks took the longest?
  • Why did they take as long as they did?
  • What made some tasks take longer than you anticipated?
  • Did the client do anything that made the project take longer than it should have?
  • Were there any “Murphy’s Law” events, where something went wrong? What happened? How much time did they add to the project?

Add Murphy’s Law

Take a look at the “Murphy’s Law” events mentioned above, and see how much they shifted your project’s timeline. Consider how much “padding” to add to your base time for such situations.

No matter what — add Murphy’s Law. As the saying goes, “If something can go wrong, it will.” Perhaps more real is to say, if something can go wrong, it might. But that’s all you need to know. So count on it.

Multiply your final amount by your “value-added” per hour rate

Once you have your final estimated amount in hours, multiply those hours by the “value-added” price you developed. Again, use the advice from other Millo contributors on adding value, to help figure out what that value-added hourly wage might be. I promise you — it’s always more than you think.

In this case, more is more

Remember: It’s better to OVERestimate your time and price than UNDERestimate it. Overestimating not only protects you in terms of your price; it also protects your reputation with your clients.

Are you someone that under-promises, but then over-delivers? Or are you that creative that misses deadlines that you yourself set and never keeps your word?

If you are always underestimating your time, you are over-promising and under-delivering to your clients. You might have won them over on price, but you are disappointing them big time with your lack of integrity. And eventually, if not immediately, you lose them.

Usually, I live by the motto, “Less is more.” This is one of the rare times when more really is more.

Estimates are always a guess

No one has a magic formula that figures out exactly how much time a project will take. In the end, despite our best efforts, estimates are always going to be a guess. But we have to start somewhere. We need some foundation, in order to plan properly and to price properly.

By using these steps, you can take some of the guesswork out of estimating and create fees that will be more educated, more accurate, more acceptable, and — more often than not — satisfying to both sides.

Look out for my next post, where I’ll be discussing more about pricing, including dealing with scope creep and feeling confident about your prices.

Let’s talk! Do you estimate your time? Share in the comments.

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About Patricia LaCroix

Patricia LaCroix has had a career in marketing and publishing for longer than she cares to admit. But, despite that it reveals her age, she’s willing to say that she’s been working a creative business from home in some way, shape, or form since 1986. Her creative skills run the gamut and include expertise in both visual and written forms of communication. Patricia’s entrepreneurial yet giving spirit drives her to help others learn how to work from home and create their own “lifestyle” careers.

 

More about Patricia’s business: LaCroix Creative is a full-service creative business in Chicago’s northwest suburbs. Patricia leads a talented team of associates who assist her in creating effective graphic design and written content — in print and online. Decades of experience — partnered with caring, personal attention — make LaCroix Creative especially well equipped to serve solopreneurs, start-ups, educators, coaches, healthcare professionals, and self-publishing authors.

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