One of the most difficult parts of running a VA business, is making sure that you are paid properly for your time and effort.
I’m not talking about your rates … I’m talking about tasks – the work you do every day.
Whether you charge by the hour or by the project, you have to have some idea of the expectation of time it will take to complete your client’s work. If you don’t know that, you could be losing money.
So do you track all of your time? If you don’t, you really should. Here are three models that you can charge your clients by … and why tracking your time for each of them can help make you more money:
Charging By The Minute or Hour
Many VAs charge their clients by the minute (please don’t do this!) or by the hour. It’s a very common business model, though it’s not exactly the best way to grow your business. But of course that’s your decision as the business owner. I caution VAs against charging by the minute – the time increment is simply too small. And, as you get faster at doing regular tasks, you actually end up losing money on this model. You will also have trouble growing your business with subcontractors because when you bring new people on, you will have to start charging more for the same tasks that you have previously done (quickly) yourself – so either you or your client will end up losing. But I digress! 🙂
Tracking your time when you are charging by the hour is essential because you need to be able to let the client know exactly where you spent your time. You are probably already tracking your time in some way if you are charging by this model.
Consider: setting a minimum rate of time to complete any project (ie 15 minutes, 1 hour, whatever) and then charge the client consistently each time you complete that project. This will help you to make money, it will clarify task rates for your client, and it will help you bring on help if and when you need it.
Charging By The Project
Depending on your area of specialization, you may charge your clients by the project. This is a great model because everyone knows how much something is going to cost before the project ever begins.
But are you tracking your time for projects? If you aren’t, you should be.
For one thing, it is easy to get distracted and put in more time than necessary on a particular detail if you are not paying attention to how you are spending your time on a specific project. If you aren’t aware of how you are spending your days, how can you be sure you are making enough profit in your business? How do you know when it’s time to increase your rates? How do you really know what your project expense is?
Consider: tracking your time on every project. You can use this information to adjust your rates where necessary, you can build new packages, and you can (here it is again) subcontract parts of your projects when necessary – and that can help you build your business and make more money.
Charging A Retainer Fee
If you are charging your clients a retainer fee at the beginning of each month, good for you! This is one of the most successful business models I see in the VA business. One reason is that you are always paid up front for your services … no waiting on money. The second is that you and the client are both making a commitment to work together for the upcoming time period – which means you are both helping each other grow your business.
But … are you tracking your time when a client is on retainer? If you are not, you definitely should be.
Like a project rate, it’s very easy to lose track of where your time is spent when you have clients on retainer. If you are sure to record everything you do for a particular client (you can provide detailed billing to them at the end of each month, or you can just keep it for your records) you will definitely be sure that your retainer level is working for both of you. It’s important to be able to look at the numbers, and have discussions with your clients about where you are using their time each month. It may be necessary to raise (or lower) a client’s retainer rate based on the regular needs.
Consider: keeping an eye on regular tasks – and detailing the ‘extra’ things that get thrown into the mix on retainer. A new product launch might yield more time for you than a quiet ‘unmarketing’ month. Some retainer clients are okay with this balance – but by tracking what you are doing, you can determine whether a client’s retainer should go up, down, or stay the same. The success of your business lies in the crunching of these kinds of numbers.
For some other great tips on how and why to track your time, click here: www.yourvamentor.com/blog/2010/11/smart-tips-about-tracking-your-time
I’d love to hear your comments on this article!