Accurate project billing will secure a stable cash flow, quicker payments, and better relationships with clients.
However, exactly how should you bill your projects? Hourly, weekly, monthly, or milestone payments – which one is the right option for you?
In this post, you’ll discover everything about project billing and which is the best way for you to bill your clients to get the highest revenue.
What Is Project Billing?
Project billing is the process of invoicing and collecting payment from customers that you’ve delivered a project for.
A profitable project billing should answer these questions:
- What is the payment structure?
- How do you plan to bill clients?
- What do you estimate it will cost?
Project billing is heavily impacted by how well you stick to your proposed budget and schedule, utilize resources, and the accuracy of your time tracking.
Why Is Project Billing Important?
Accurate project billing is absolutely essential in order to make sure you’re paid exactly what you’re owed, and to help you maintain a positive cash flow in your business.
Here are the biggest benefits of accurate project billing.
#1: Achieving Quicker Payments
A detailed invoice gives clients everything they need to approve and process the payment. You won’t have to worry about back-and-forth emails and revised invoices that will only cause delay and keep the money out of your business.
Instead, the whole process will be a lot faster, smoother, and without any friction.
Of course, we can’t guarantee that your clients will pay you quickly. However, it will be a lot quicker than with a bunch of revised invoices and heated discussions.
#2: Keeping Everything Organized
There’s nothing worse for a professional services project than a client who’s unhappy with what they’ve been charged. This can only happen if you have a chaotic project billing – without any organization in place.
Keeping tight control over project billing protects your relationship with your clients and makes your business more professional.
#3: Improving Future Forecasting
You’ll gain an accurate insight into how long particular tasks take, and the cost to complete. So next time you’re asked to bid on a similar project, you’ll know what to charge – making you less likely to shortchange yourself.
This can be especially helpful for future flat fee projects, where an inaccurate project estimate can lead to a huge potential revenue loss.
Types of Project Billing
Not sure how to bill your clients?
In this section, you’ll discover the pros and cons of each type of project billing, so you can choose the one that suits you best.
You exchange your time for money.
You sit down at your computer, start a timer, and every few weeks send an invoice to your client with your hours multiplied by your hourly rate. In this way, if the client decides to change course midway through the project, you’re protected.
(No such thing as an unpaid scope creep.)
Daily billing gives you a lot more leverage on how you manage your time.
The daily fee is billed no matter how long the work took, but there is usually an agreement on how many hours of work need to be completed in a day.
This has the same principles as the hourly rate, but giving you a bit more flexibility. This is unlike the hourly rate, which would tell your clients exactly what you’ve been doing, for how long, and when – increasing the chances of micromanagement.
For this type of billing you simply set up a monthly budget for a specific project. This is usually the best option when you have a lasting relationship with a client you trust. The projects should be recurring each month, or each project should last a longer period of time.
This method is the standard for retainer agreements.
Per Feature or Milestone-Based Billing
You’re now billing for a specific amount of scope.
We recommend this type of billing from the previous ones since you’re not exchanging your time for money. This allows you to price a particular unit of scope based on the end benefit.
Per-project billing is charging for the value you produce. Your clients will know exactly how much a project will cost, mitigating the risk of budget overflow. Billing this way can allow you to get an extremely high ROI on your time because you will always get paid that much, no matter the hours you put into the project.
But it can also really hurt you if you work with a client who looks at your engagement as an all-you-can-eat buffet.
Which Project Billing Option Do We Recommend?
We personally recommend these two billing options:
- Per project
Per-project billing helps you position yourself as an asset and binds your price to the results you’re going to bring. Also, you’ll not be exchanging time for money, allowing you to get an extremely high ROI.
However, if you’re just starting, or not sure how much to bill for a whole project – we recommend sticking to an hourly rate.
It’s the easiest way to NOT undercharge for your services while avoiding scope creep.
Not Sure How to Track Your Hours?
It can be difficult to estimate the time it takes you to create a project, and therefore how much you should charge for it.
But knowing how much your time is worth is critical because It will help you:
- Stop selling yourself short
- Look more professional (you won’t hesitate when a client asks about it)
We’re going to use Atarim’s time-tracking feature to help you figure out your hourly rate.
Once you have found a task you would like to track time on, you can click the “Add Timer” button in the “Task Attributes” section.
This will add this task to your “Active Timers” in the bottom left of the screen. This only becomes visible if you have one or more tasks added.
To add another task to the active timers, we can click on another task and hit the “Add Timer” button.
You can only have one timer running at any given time.
After Action Report – Create Effortless Project Billing with Atarim
The right project billing and invoicing strategy will go a long way to help make your business more organized, while preventing any cash flow problems. There are many different ways you can bill your clients – we’ve covered the most popular ones.
Which one you choose depends on your preference, client, and the type of project. We highly suggest sticking to either an hourly or a per-project billing option, which will be suitable for most clients and projects.
Looking to track your time or better organize your work? That’s what we’re here to help you with.
Atarim offers painless time-tracking to let you, a designer, and your client know precisely how long each task took, so you get paid as agreed – no compromises! Agencies, developers, and project managers use Atarim to eliminate the need to rely on guesswork and endless back-and-forth email communication.
One of our unique and revolutionary features is that our tool has been built on the foundation of point-and-click collaboration – allowing clients to point at what they’re referring to and then immediately leave feedback, say what needs to be changed, etc.
If your main objective is to avoid scope creep and track your hours to get paid what you really deserve, give Atarim’s time tracking & project management functionality a try for free.
- Integrated into the leading visual collaboration platform trusted by 13,000+ agencies (web dev, design, and beyond) worldwide.
- Supporting project delivery for 1,200,000+ of their clients and stakeholders.
- Deliver projects in weeks instead of months.