In today's article, I'd like to share with you the story of how I discovered the hidden cost of filling in timesheets and a formula you can use to calculate the real cost of your time tracking solution.
What I discovered when I started charging by the hour
To this day I remember when I made the decision to switch from full-time employment to charging by the hour. It gave me the freedom to do things like enjoying the summer days in the middle of the week.
It was great, but it wasn't all roses. The people I worked for were asking me to track the time I spent working on various projects. Don't get me wrong, it wasn't anything abusive. I was very lucky to always form healthy partnerships. Still, now that I worked on multiple projects, each of them billed separately, sometimes for the same customer, I had to somehow keep track of that.
I was using one of the popular tools, and because I wanted to minimize the cost of context switching, I wasn't thinking too much about things like the perfect label for what I was about to do or what was the category that best described it. In the end, if I really have to switch from one task to another, I'd rather do just that without adding the extra work of predicting the right description of some work I haven't even done yet. So I was just jotting down things that roughly described what I was working on. It was the best thing I could do to focus on my tasks, deliver them on time, and still have some record of the time it took me to do so.
It turned out that this seemingly free time tracking software was costing me hundreds of dollars a month!
However, when the time came for me to send the first invoice, I was shocked to discover how long did it actually take! I knew that I had a couple of weeks' worth of time entries to organize. What I didn't know was that it'd take me literally hours! You know what they say: time is money. That's especially true when you are a freelancer and you charge by the hour! And instead of doing billable work, I spent a significant chunk of the afternoon on tedious tasks such as:
- filling in many different text fields to create the right categories
- expanding multiple dropdowns so that I could start using what I had created through some form in another browser tab
- refreshing browser tabs, because some changes weren't reflected
- clicking through paginated tables that all looked the same
- checking tens of checkboxes
- checking these checkboxes again, because I was already so tired that I accidentally unchecked them with one click
Late in the afternoon I was finally done with that, but I couldn't stop thinking about how much did this dreadful experience cost me. I multiplied my hourly rate by the number of hours I spent fighting with these clunky tables, dropdowns, and checkboxes and I didn't like what I saw. It turned out that this seemingly free time tracking solution cost me hundreds of dollars!
How to calculate the cost of time tracking software
If you'd like to better understand how much does time tracking cost you, use the following formula:
12 months x how many hours a month it takes to prepare a report x your hourly rate + the annual fee for the software
For instance, even if don't pay for the app, but it takes you on average 1 hour a month to prepare a report and your hourly rate is $30, the annual opportunity cost of that time tracking approach is at least $360:
12 months x 1 hour x 30 USD hourly rate + 0 software fee
It's at least 360 USD a year, because it doesn't include the cost of context switching. The real cost of context switching is hard to estimate, but we can look at this report by Qatalog in collaboration with Cornell University’s Ellis Idea Lab. People report spending on average over half an hour every single day switching between apps. They also report that restoring the flow after being distracted takes almost 10 minutes. That's why it's already a huge win if we can simply say "I'm working on the product page" and postpone making any precise decisions about the exact name and category of that activity, because that may involve creating new categories, assigning customers etc.
Time is money and I didn't want to waste it on time tracking. Here's what I did.
I respected the wish of my customers for me to provide them with detailed reports. I understood it was important to them. In the same time I didn't want get distracted by time tracking or spend hours on it. I wanted to eat my cake and have it.
I believed the right software could make both me and my customers happy, so after failing to find a suitable tool I embarked on a journey to design a time tracking solution that'd allow me to quickly organize time entries after the fact. After a fun, hackathon-like weekend I came up with a solution that relied on a console app and my ability to directly edit a database in a text editor. I know, that sounds crazy!
The prototype wasn't perfect, but it helped me save thousands of dollars, because I was able to do more billable work since timesheet organization wasn't consuming a lot of my time anymore.
That prototype was a proof that preparing detailed, well-organized reports doesn't have to take hours. You also don't have to think about it too much while you're working, because if things can be easily edited, it doesn't feel as if they were set in stone.
I wished more people could benefit from similar or even greater productivity boosts! After speaking to others who also tracked their time I knew I wasn't the only one who'd rather do something meaningful instead of filling in boring forms presented me by a time tracker.
I wished my friends could simply drag and drop things where they should be instead of wrestling with clunky forms. I wished there was an easy way for them, something like this:
That's why I built the howlong.app - to stop wasting time on reports and avoid all that frustration caused by drowning in old-school UIs with countless forms, dropdowns, and checkboxes. I truly believe people should be free to do more valuable things instead!
You may find yourself in a situation where your current time tracking solution requires you to spend many hours a month just to organize the tracked data. And even if you take your time and categorize everything correctly from the get-go, you still may be paying a high price due to the context switching it requires.
If that's the case, then you may want to discover the opportunity cost of your current approach by calculating how much money you could make if you did billable work instead. You can use the calculator mentioned above to do so.
You may also be surprised to discover that your time tracking approach costs you hundreds if not thousands of dollars a year! If that's the case, then I suggest you look for a new tool. There are plenty of interesting solutions out there. What I can give you is a free, over a month-long trial of howlong.app. Feel free to check it out and please let me know if it helped you!
Have a great day!