It’s been said: If you ask 100 interior designers how they bill for their time, you’d get 100 different responses. However, time tracking is one strategy that’s necessary across the board. How designers charge for their services is a topic that’s often kept close to the vest, usually the chosen method is hourly or flat rate—or a combination of the two. But regardless of individual charging methods, accurate time tracking is imperative for interior designers to build a successful design business. Here are six reasons why time tracking for interior designers is essential.
READ ALSO: 5 Reasons to Invest in a Project Management and Accounting System for Time Tracking
1. Time Tracking = Correct Time Billing
Proper time tracking—which informs proper time billing—is a principle that must be established in the ethos of a design business. It’s not about exerting control over team members’ time; it’s about every member of the team accurately tracking their own time for each project so that the design firm is correctly billing clients.
Designers at various levels of experience will likely charge different rates – a firm principal will likely charge more than a junior designer, for example. And, a range of activities completed by different employees might have varying costs associated with each of them. So it’s essential for all parties to capture how much time is spent on various activities in order to properly bill clients while navigating these variables.
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Also interior designers often shift their time among multiple projects simultaneously, and as they do so, properly tracking their time is crucial. For example, say a designer is working on drafting a proposal for Project A, when another client from Project B calls to discuss a matter. The designer must pause working on Project A and transition to Project B, while accurately logging their time dedicated to each project.
Time tracking for interior designers is essential to having a solid record of time spent on each project and is the only way to accurately bill each client. If you are working with a platform that facilitates time tracking for interior designers alongside providing report generation and invoicing, this helps designers stay efficient, and complete administrative tasks in less time.
2. Generate Accurate Invoices and Keep Clear Communication with Clients
Proper invoicing is a critical component of a successful design business. Don’t just guess what you’re doing; know exactly how much time you’re spending, what you’re charging for your time, and how to properly communicate that to your clients.
By carefully tracking their time, designers are able to accurately invoice clients and demonstrate why they’re charging their fee, with tangible records of hours spent and tasks completed to back up any invoicing queries.
Having these organized, accurate reports that detail time and expenses at their fingertips allows designers to quickly and efficiently communicate project fees to clients, to build trust and stronger relationships.
3. Understand Your Finances: Give More Accurate Proposals
Data on how you spend your time can facilitate how you scope future work. Time tracking allows you to record what you’ve spent and earned on one project, you’ll know how to accurately create a proposal for and bill for a similar project in the future. And, as a designer’s catalog of work grows, so too does their point of reference in terms of accurately billing for projects.
With accurate proposals, designers can establish clear, professional expectations and give their clients a structured roadmap for project planning and organization. An accurate proposal makes sure both parties can understand the scope of intended labor and minimize misunderstandings.
ALSO READ: How Gail Davis’ One-Person Design Firm Achieves 2x Client Growth with Studio Designer
4. Use Reporting to Budget and Drive Profitability
Being able to have a true overview of your finances facilitates wise budgeting. And by viewing your labor alongside your product when you run reports, it’s much easier to truly understand how your projects have performed. You can get answers to questions, including:
- Do certain types of projects or clients require more time but result in lower product sales, or vice versa?
- Are there particular stages or tasks within projects that consistently consume more time relative to the revenue generated from product sales?
- Which projects are the most profitable based on both time and product sales?
These questions can help you know when to adjust your prices, and what projects you can take on to run a profitable business.
5. Understand Your Team, How They Spend Their Time, and How They Can Spend It Better!
By having all designers on your team track their time—both billable time and non-billable hours—you’re able to identify and address bottlenecks, and anticipate where future roadblocks might occur. And, if you are a team of one, you can better understand your own workflow.
Time tracking also allows designers to be reflective and able to avoid mistakes going forward: “You’ll have a record of your hours so you can see when you’re spending too much time on a given portion of a project, or where you should have paused to get approval before proceeding, so that you didn’t end up wasting time,” notes Robert Stone, Director of Professional Services at Studio Designer.
ALSO READ: 8 Ways to Run a More Profitable Design Business
By understanding how your team spends their time, you can also make decisions about staffing. For example, if you see that you are spending a lot of time completing administrative tasks, it might be worth hiring an assistant to take this off your hands so you can focus on creative work.
Or, you can understand how profitable tasks are by considering revenue against the cost of labor. For instance, If an employee takes 20 hours to complete a task, and you pay that employee $100/hour (costing your business $2,000), but you’re only charging your client $1,500, you’re losing money on this task. On the next project, you can either staff a less expensive employee to complete the tasks or charge your client more for this work.
6. Avoid Selling Yourself Short: The Importance of Time Tracking for Interior Designers Using Flat Fees
Some believe that time tracking is only necessary for designers who charge by the hour. However, time tracking is crucial for both designers who bill by the hour as well as those who opt to charge a flat fee so they are sure that they’re being properly compensated for all the time they have spent on particular tasks of a project.
Often, it’s difficult to see how profitable a project is unless a designer does a deep dive into where their time is actually spent. Stone explains that sometimes a project can go off the rails, but by time tracking you can see where your staff hours are spent, and you’re able to look back and figure out where things went awry.
ALSO READ: Flat Fee Calculator for Interior Designers – from Mydoma
For example, a designer might charge a flat fee of $100,000 for a given project; however, from conception to completion, they spent 6,000 hours of their time on this work, so that means they actually only earned minimum wage for that project.
Fumbling with Google Sheets or Excel docs, while also handling billing and invoicing through other platforms like Quickbooks or Bill.com can be a hassle. Toggling among various programs leaves plenty of room for error in translating information from one platform to another.
ALSO READ: Maximize Your Profitability with Studio Designer Flat Fees: Easy Setup, Accurate Billing, and Insightful Reporting
Besides being able to substantiate and support your design fees with tracked, timed billing, a comprehensive platform (like Studio Designer), which facilitates all business operations in one unified system, offers transparency between the designer and the client, simplifies project management, and makes sure you spend less time on administrative tasks.
Want to learn more about Studio Designer?
Studio Designer is the leading digital platform for interior designers managing and growing their design businesses, featuring fully integrated project management, time billing, product sourcing, and accounting solutions.
Want to learn how Studio Designer can work for your design firm? Schedule a call with our team: https://www.studiodesigner.com/get-a-demo/
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