Question

Topic: Career/Training

Billing To Non-billing Ratio For Mktg. Firm

Posted by Anonymous on 9/14/2010 at 12:28 PM ET 250 Points
I'd love to hear other people's recommendations for what kind of billing ratio you shoot for in a day. I've been a marketing contractor for 10 years now and my business has really grown in the last year, so I'm trying to be more efficient and organized. I am the contract marketing manager/director for a few companies, so there's no lack of things to bill for, but I've been noticing that I'm only billing about 50% of the day - i.e. I work 10 hours but am only billing 4 or 5. The rest is email, some research, some poking around on the internet, etc.

My lawyer friend says she works 9 and bills 8, but is that realistic to shoot for since I own my own business and have a lot of admin stuff to complete? What do you all aim for as far as billing ratios?
I've been working most weekends for the past year so I've got to figure something better out.
Any best practices? Thanks in advance for your help.
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RESPONSES

  • Posted on 9/14/2010 at 12:43 PM Accepted
    Just FYI, I don't track hours in any formal way. Nonetheless, I am pretty sure I spend at least 20-25% of my time on admin and non-billable activity. And, because of peaks-and-valleys in the workload, I suspect there's another 20-25% of time "lost" when there isn't a full load of work to do.

    Net: I would think that 50% billable hours is probably pretty close.

    Now the more important issue: I would never share hours or billing rate with clients. It lets them know you're selling your services by the hour instead of based on value delivered. It's not fair to you and it's not fair to the client.
  • Posted by telemoxie on 9/14/2010 at 1:32 PM Accepted
    I think that 50% is about right.
  • Posted by matthewmnex on 9/16/2010 at 11:07 PM Accepted
    A very interesting discussion.

    I guess it depends on the nature of the assignment and the scale of the project but personally I don;t bill hourly.

    I bill monthly.

    Then it is up to me to manage my hours accodingly.

    I also don't bill samll OOP expenses like gas, telephone coffee, lunches.

    Ask your clients to put you on a monthly retainer.

    Some might squeela dnsay, you only worked 10 hours this month but 40 last month.

    Just tell them they are buying your expertise not your labour.

    If you have thre or four clients at US$10,000 per month each, then ou should be doing ok and it is relatively cheap and simpler for the clients to manage the costs since thye know upfront exactly what their cost will be before you start.

    One problem with billing for hours is that they might start to argue aboutexactly how mamy hours you really did especially if you are working off site.

    Another approach you might consider is typical in the software industry.

    Agree on an hourly rate and elll them a basket of hours up front.

    I just did exactly this for a consultant we hired. we paid up front 100 hours and then he just submits a report on time consumed and we sign off on it weekly.

    Once all the hours are used, we buy another 100.

    Always be sure to get paid up front though :)) otherwise the process is redundant.

    Billing hourly is a major admin pain and major headache for you and for the clients so simplify your own life (and your own admin work) and choose one of my suggested methods. :)

    Good luck.

    Matthew
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