As a freelancer, time is your most valuable asset. You are the marketing, sales, product, customer service, and finance departments, all rolled into one. You only have so many productive hours in a week. Therefore, to grow your income, you have to find a way to either increase revenue or decrease costs—all without working more hours.
“The impossible dream!” you might say.
Well, in this article we will take an in-depth look at one tactic that can do both at the same time!
The Path to Success
It’s not really a secret… focus on increasing your average client revenue.
Sounds great, you might say. But my clients have fixed budgets! My clients aren’t interested in my other services! It’s hard enough getting my clients to pay me as it is!
All valid points.
We’re not talking about upselling or cross-selling, although if those tactics are a good fit for your clients, then by all means give them a go.
We’re talking about repeat business.
Loyal, return clients are your secret weapon to freelance success.
Let’s dig deeper…
Understanding Customer Acquisition Cost
You put a lot of resources into finding, vetting, and onboarding new clients. There’s the money that you spend on advertising, membership fees for hiring platforms, hosting for your website, and the technology tools you need to do your work. There’s the time that you put into self-promotion on social media, maintaining your website, updating your portfolio, researching clients for email outreach, doing email outreach, responding to emails, talking with potential clients that will never turn into actual clients, sending quotes to potential clients…you get the picture.
And guess what?
Your time isn’t free.
Simply put, your customer acquisition costs are the total costs of acquiring customers (including your time) divided by your total number of new customers over a given period.
Let’s do a little math:
Say your combined marketing, technical, and production costs in a year are $20,000. And say you spend 30 hours a month on self-promoting and customer-acquiring activities, and that your target rate is $75 per hour.
If you only had five new customers all year, then your CAC would be $9,400 ($47,000 divided by 5). If you had 20 new customers, your CAC would be $2,350 ($47,000 divided by 20).
The point is, acquiring new customers is a cost—a BIG cost. According to HubSpot, acquiring a new customer can be anywhere from 5x to 25x more expensive than retaining an existing customer.
Now, what if you had so much repeat business that you didn’t need to spend any time or money acquiring new customers in a year? Then your CAC drops to zero, and you pocket an additional $47,000.
Assuming you work 40 hours a week, 52 weeks a year, you’ve just increased your hourly rate from $75 per hour to almost $98 per hour. Congratulations—you got a raise!
And if you work less than 40 hours per week, then your new hourly rate would be even higher.
So, how do you get customers to want to work with you over and over again?
Show, Don’t Tell
When a client hires you on a freelance basis, there’s a lot of trust involved. You have to trust them to communicate clearly, in a timely manner, and to pay you for your work. They have to trust you to do high-quality work to the agreed upon specification in a reasonable amount of time, and to bill them accurately.
From the client’s perspective, what actually happens between when they hire you for the project and when you present a finished result is a bit of a black box.
And guess what?
People don’t like unknowns.
By giving your client a look inside the black box—showing them how their project came together from research to scoping to execution and revisions—they no longer have to take your word for the time that went in, because the information is right there in front of them in the form of a billable time report.
Think of it:
Simply by tracking your billable time with a tool like Toggl and including a report with your invoice showing the work that you put in, you can increase your client’s trust in you to the point that you become their go-to person on future projects!
It sounds too good to be true, I know.
Don’t take my word for it.
Software developers 3angleTech include time tracking data in their customer billing reports. “Our customers love the transparency that Toggl offers, and including Toggl reports with billing increases their trust, because they can see that they are paying only for work done,” says Co-Founder Ionut-Cristian Paraschiv. “Toggl makes billing transparent and helps customers see the costs of the features that they request.”
Additionally, the consultants at Moove It delight their clients by combining time tracking data with project statistics in a weekly report. “Just like you go to a restaurant and get a bill for your meal, we need our clients to understand exactly what they’ve ordered and what’s been executed on,” says COO Gabriel Fagundez. That transparency creates a trust that is further emphasized by the quality of the work. “Through Toggl, our clients can feel like everything is under their control. We can facilitate that.”
Such a simple thing. Such a big impact.
When you start tracking your time, the data you accumulate is the gift that keeps on giving. Not only can time reports help you retain existing customers, they can help you land new business too.
Bring Props to Your Pitch
When you quote a new client, it can sometimes be quite the guessing game. How many rounds of revisions are they going to want? Are you sure that you both have the same understanding of the language being used? Are there any implementation steps they’re going to want you to do, even though they haven’t asked about that up front?
With everything you have to juggle, one thing you don’t need to worry about is underestimating the time that type of project takes you.
When you track your time consistently, you accumulate bucketloads of super valuable data about precisely how long it takes you to accomplish different tasks. And you can bring that information with you when you pitch new clients, like Revelation PR, Advertising & Social Media does.
Like a lot of service-based businesses, they bill hourly, so they track every minute spent on client projects to ensure that they are paid in full for their time. The ability to look back at historical time data for a particular type of project or client has made it easier to generate estimates for prospective clients.
The same is true for Fullstack Labs—when the founders first formed the company, they were essentially freelancers with big dreams. “A lot of the old-timers in our industry bill by the day, week, or month. They’ll go to clients and say, ‘We’ll put three developers on the project.’ And that’s the highest level of visibility you get,” says CEO David Jackson.
Not so for Fullstack.
“Toggl gives us the opportunity to outcompete our rivals. When we pitch new business, we bring our Toggl reports and demonstrate the level of visibility we can provide,” Jackson says. “We view this differential as an opportunity to outcompete others in our industry.”
And outcompete they have. FullStack has grown ten-fold in a few short years, winning business with the likes of Uber and several Fortune 500 companies.
At the end of the day, Jackson says “Toggl runs our whole business in terms of how we bill clients and generate revenue.” Through profitability and revenue projections per developer, FullStack Labs has the data to prove their hard work is being directly translated into value for the client.
The bottom line?
“It helps us win more business,” says Jackson.
Toggl provides time tracking and productivity tools to help freelancers boost efficiency, meet deadlines, and ensure that you get paid for your time. And it’s so simple, you’ll actually use it. Toggl integrates with 100+ commonly used business applications and syncs time entry data across its mobile and desktop apps, Chrome and Firefox extensions, and website. Try Toggl free for 30 days.