Jeremy Tauri: Charge for the job not the time.

Charge per job - not hour

How do you bill for your time? Do you give your clients a cost per hour and an idea of how many hours a particular job might take? Or do you give them a set fee, no matter how long a job takes to do?

There are times when it is appropriate to charge your customers by the hour but other times it is better for the business and the customer to give a rate based on a particular outcome. If you have a lot of jobs that are regular and can be systemised, there are benefits to moving to a set price per job. Here are several reasons why time-based billing is not a good idea.

-The faster you are, the less you'll earn: People work at a different pace and have different levels of skill. If you work quickly and decide to compensate for this by increasing your hourly rate, you can initially put someone off using your service. Charging by the hour or by units of time can short-change you if you are exceptionally fast at what you do.

-No one knows how much your service is going to really cost. You can give an hourly rate but how accurately can you estimate the time it's going to take? And what if you get it wrong? It can be demoralising to go over-budget in a job - to see the hours whittled away in write-offs. Clients like to know how much they're going to pay.

-Time-based billing is an administrative nightmare. You have to keep accurate timesheets to bill properly, especially if there's a resulting fee query. By pricing per project you can save administrative time. No more compiling timesheets and wondering how much is an appropriate fee to charge - the invoice can also leave your office sooner if you don't have to sit and work it out each and every time.

-How you account for time can mean overcharging your clients. People charge in many different units of time. Six-minute units, 10-minute units or 15-minute units are common. If you measure time in 15-minute units and a job takes, say, 36 minutes - do you round it up or down? There is the risk of overcharging clients which they won't want to wear.

-You limit your income earning potential by the number of hours in a day. If you think, "no problem, I'll just work more hours", that's working harder, not smarter. You can earn more if you're smart about your pricing.

What is it that clients pay for ultimately ? It's the end result.