What Are the Correct Billing Time Increments for My Business?

The popular saying “time is money” has never been more true than when you’re a freelancer trying to figure out your billing time increments. If you are just shifting from being an employee, then you are probably going to find this concept overwhelming, and a little bit confusing—and that’s normal. When you are a 9-to-5 kind of worker, you just usually have one boss to answer to and a task list that you have to stick to. Whereas if you are a freelancer, it’s a whole other world of responsibilities and clients.

What Are Time Increments for Billing?

For those who are relatively new to freelancing, you might be wondering what are billing time increments in the first place. Let’s break it down, increment is the amount of something that changes, such as a minute increase. Time increments are the set amount of time that will be used for accounting for something, like time entries. Billing time increments then pertain to the set amount of time you work that you can bill or charge your clients.

Hourglass with red sand

In freelancing your fee will depend on what is agreed upon with a client. They may pay you once you finish a project, however, others would prefer to pay you for the time that you actually spent on said project. Time increments for billing can be a fair solution for both you and your client.

For example, if you use 1-minute time increments meaning you get paid for every minute that you work for your client, it can be very time-consuming and hard to keep track of.

Why Charge Based on Time?

If you just started out, you might feel like charging dependent on a project might be the best idea. However, there are actually quite some benefits to charging your client based on time increments. Here are a few:

Keeps you focused on work

As a freelancer, it is sometimes hard to keep track of what you are doing, mainly because you have so much going on. But, if you work using time increments, you will have an easier time sticking to a specific task and a specific schedule. If you have hourly increments, you’ll know that 12 PM to 1 PM is for client #1 and 2 PM to 3 PM is for client #2, and so on.

Protects you from freebies

One of the main drawbacks with working per project is, that sometimes it is unclear where revisions lie. For example, if you are a scriptwriter, you have already completed the script and that’s that. But then, the client wants a “little” tweak on page 3, okay, that’s fine it’s just one edit. However, you find that the client has “a few more” tweaks here and there, and now you’re pretty much rewriting an entire scene or act—all for free! Whereas if you use time increments, these small changes sent to you one at a time will be billed to your client individually too.

Gives your time value

As much as you value your clients, there are some that might contact you beyond working hours. Or worse, call you pretty much every hour or so. Now, if you have time increments of 10 minutes, your client might think twice before they call you for every little idea or final note that may pop up in their head.

With time increments for billing, even if the client only chats with you for 3 minutes, this will still count as a 10-minute fee. Clients will know that your time has a lot of value, time that should be spent on the actual project, and should then discourage interruptions to your work day.

Factors that Affect Billing Time Increments

Now that you have a clearer understanding of billing time increments, it’s time to find out which is the right one for your business. How do you even go about it? Well, it would really help to decide using these 5 factors:

Stopwatch timer

1. Industry Standards

First things first, what is your business? Because the industry you are in might actually have a standard when it comes to billing time increments. For example, some lawyers follow a 6-minute time increment. You can’t really create or set a new time increment if there is already a standard to be followed for your industry. A good idea is to join online communities for freelancers like yourself, and ask around if they follow a specific time increment billing. If there aren’t any, you can check out the other factors below.

2. Business Credibility

What is your business like? Is it new? How many years have you been operating? Do people know about your freelance business? Do you have a success rate? The time increments you will use will depend on the business you are currently running. If your business is virtually unknown it may be harder to set your own pace. Now, if you have a rather successful business where clients are the ones going after you, then you have a better chance of setting the time increment to something you prefer.

3. Holidays or Peak Seasons

Artist painting

Realize that the value of your time is also dependent on supply and demand. For example, if you are a digital artist that specializes in custom Christmas cards, just imagine how many orders you might get during December. You have to adjust the time increments accordingly or you’ll get your hands full and not be able to deliver on time. Not to mention, you might get burnt out and feel like your rate is not worth it.

Think how long it takes you to create a draft, and how long it takes you to finish a custom artwork. You may also want to compute the amount of money that you will need to keep your business running in the future.

4. Client

There are clients who have a contract ready with an offer and all of your tasks listed plus they may already have time increments set. On the one hand, that’s a good deal since you don’t have to work out the math anymore. But on the other hand, you have to speak up if you think the time increments are not fair to you.

5. You

Now, if all of the other factors are not available, the only way to decide the billing time increments is on you. Of course, not everyone will know from the get-go and there may be some trial and error along the way—but that’s okay. There’s a reason why the first word of a freelancer is free, you have the freedom to do your own thing. But, you must remember that everything you do has a consequence whether it be good or bad. The least you can do is to learn, that way, you’ll get the correct billing time increments that will be best for your business.

Calculator on iphone


So, how do you actually know when the billing time is correct? There’s really no one way to find out. All you can do is check in with past and current clients and get feedback from them. Another way to know if the billing time increments for your business is correct is if your business stays afloat or is actually thriving—you’re definitely doing something right!

Now, if your business isn’t doing too well, and you find yourself pretty burnout with the amount of work you are doing, then it might be time to make an adjustment. Create the billing time increment that will work for you and will be sustainable for your business.

Get Organized & Win More Clients

Kosmo has everything you need to run your freelancing business.

Post written by:

Kosmo is a free All-In-One Workspace for Freelancers.