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3 min 11 sec
0:00
You sell hours
0:18
Utilisation
0:52
Your effective rate
1:22
Why track time
1:55
Time tracking in Beeswax
2:31
Recap and quiz
Accounting 101
·
Winning work
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Episode 7
Time Is What You Sell
(And you're probably not charging enough.)
A service business sells hours, and there are only so many in a week. Work out Maya's utilisation and her real hourly rate on a fixed-price job.
time tracking
utilisation
effective rate
pricing
Transcript
0:00
Here's the thing about running a service business. You don't sell widgets. You sell hours. And there are only so many of them in a week.
0:07
Maya can't make more hours. She can only sell them well, or sell them badly. Today, we find out which.
0:18
Start with a normal week. Maya works forty hours. Twenty-six of those are on client work she can bill for.
0:24
The rest is the stuff that keeps the lights on. Quoting. Emails. Admin. Bookkeeping. Watching accounting videos. Valuable. Just not billable.
0:33
Twenty-six out of forty is sixty-five percent. That's her utilisation. The share of her time she actually gets paid for.
0:41
For a small studio, somewhere between sixty and seventy-five percent is healthy. A hundred percent means you've stopped doing the admin. Which means it's piling up somewhere. Probably in a shoebox.
0:52
Now, pricing. Maya charges a hundred and twenty-five an hour. For the Fern and Fold brand refresh, she quoted a fixed eight thousand. That's sixty-four hours of work, at her rate.
1:03
The job actually took eighty hours. It always does.
1:06
Eight thousand, divided by eighty hours, is a hundred an hour. That's her effective hourly rate. What she actually earned for each hour she actually worked.
1:16
She gave away sixteen hours. Two whole days. Nobody sent a thank-you card.
1:22
This is why tracking time matters, even on fixed-price jobs. On hourly work, your time becomes the invoice. On fixed-price work, your time tells you whether your price was any good.
1:33
And notice what's not in the books. Hours aren't money until you invoice them. Time is how you manage the business. The ledger only gets involved when you bill.
1:44
Two quick fixes, if your effective rate keeps coming in low. Quote with your real hours, not your hopeful ones. And put a limit on revisions, in writing, before round seven.
1:55
In Beeswax, you track time against tasks. Start the timer, or add the hours afterwards, and mark whether each entry is billable.
2:03
Every project shows what's waiting to be billed. Closed tasks, ready to invoice, and the hours behind them. It's a gentle nudge. Or a slightly guilty one.
2:13
When you're ready, pull those completed tasks straight into an invoice, as line items. No retyping. No forgetting the Tuesday you spent on the logo.
2:23
And the project's money view compares what you've billed with what the work cost, so you can see how the job really went. Not just how it felt.
2:31
So. You sell hours. Utilisation is how many you get paid for. Effective rate is what each one actually earned. And your timesheet is the only honest witness.
2:43
Quick one. Maya works forty-five hours one week. Thirty of them are billable. What's her utilisation?
2:49
Have a think.
2:53
Thirty out of forty-five. Two thirds. About sixty-seven percent. Right in the healthy zone.
2:59
Now go and put your prices up. Just a bit.
3:02
Next time: invoicing, and the money clients owe you. Accounts receivable. Also known as the reason you check your bank app at midnight.