Switched from flat monthly billing to hourly for my consulting and finally stopped losing money

For about 8 months I did flat rate projects for small businesses in Phoenix. $1500 for a full network audit and recommendations. I thought it was simple and clients liked the fixed price. Then I tracked my actual hours on 3 projects and realized I was averaging 22 hours each, which worked out to like $68 an hour before taxes. For the more complex jobs with old wiring and weird server setups I was sometimes making less than minimum wage. Last month I switched to a $150/hour rate with a 5 hour minimum and gave a rough estimate upfront. First client with the new system took 14 hours and paid $2100, which is way more fair for both of us. Anyone else run the numbers on your consulting rates lately and get a shock?

2 comments

2 Comments

blair7023d ago

Nah @the_jake, three projects is enough to spot a pattern when you're losing money on half of them. I did the same thing last year with website maintenance packages, thought $500 a month was fine till I realized one client's "quick updates" were taking 8 hours some months. $62.50 an hour before I even paid for hosting and tools is brutal. Sometimes you need to see the bad math on your own invoices to finally change what's broken.

the_jake23d ago

So you did 3 projects and decided to overhaul your whole billing system, seems a little dramatic.