In today’s podcast, Sarah Durham of BigDuckNYC.com (a favorite speaker on pricing at CFC 2012) talks with me about how she integrates her own unbillable time into her pricing. (We recorded this a few months ago, so please disregard the "upcoming CFC" references. Now, the next conference is May 12-16, 2014 in Boston!)
“If you’re making more money than you’re spending, you’re doing fine,” says Sarah. But if you’re growing and your time doesn’t have a direct corollary to billable work, there are other things to consider. Sarah credits her learning of this concept (also known as “utilization” or “billable efficiency”) to David Baker of ReCourses.
Whether it’s just you or you have a staff, some amount of your time is unbillable, whether you are answering email, doing marketing or nurturing clients. The goal is for 55- 60% of the collective time to be billable. As the principal of a 20-person firm, Sarah’s time is less than 10% billable. (She knows because they track all time, billable and non-billable.)
In the podcast, she shares how each person on her staff contributes to the average, who is more billable than whom, and why she tracks unbillable time as much as billable time.
She also reveals how much it costs her firm to secure a new client: $500-3000. That’s what they would charge if they billed it out. So she tries to bake some of that into proposals for each new client. “It’s a wild card,” she admits.