Is your company giving away too much ‘free’ work?
It’s great to be able to give time away for free – so just make sure you know how much of it you can afford.
The idea of providing ‘free’ work to your customers, i.e. additional work on a project that your customer doesn’t pay for, is a crazy idea for some. There are numerous blogs out there stating that free work is a bad thing, customers will take advantage and it would be costly for your company to provide it.
However, this idea of ‘free’ doesn’t always have to be such a terrible thing. Especially if you’re keeping track of both your billable and non-billable utilisation in one place so you can see exactly what work is being done and calculate the exact costs alongside your budgets.
Business – as we all know – has long been dependent on ‘freebies’. So much so that it’s now part of many people’s expectations. Whether it’s giving out free samples to entice buyers to try something new; rewarding consumers with something extra, or even offering interest-free payment terms for a set period of time – free can be good. As recent data have suggested 81% of consumers actively ‘want’ a relationship with a brand. Some 65% claim things offered for free drive this.
The reality about ‘free’ is that it’s really all just a matter of perception. There is – as the old adage says – no such thing as a free lunch. And it’s true. It’s just that what appears to the end recipient as being free simply has a planned cost to the provider at the other end – most usually in time. This is how service providers – such as lawyers and marketing services companies have been accounting for it for years. Many will habitually provide free – or so-called ‘pro-bono’ services – simply because it’s part of their mission to be more socially responsible. They’ll do so because giving their time has positive public awareness properties that make them seem like a good organisation to be doing business with. Put simply, a small amount of time given away here can result in more billable hours there from new or existing clients impressed by this altruism.
The only thing that stands in companies’ way is recording it. Free can become costly if firms don’t keep tabs on which are their billable hours [ie those that they apportion out to clients, and which have a cost attributed to them], and which are not, and which they are willing to donate.
Knowing the interplay between the number of hours donated and the number of hours that are not is essential. It has obvious importance for being able to work about profit and loss, and even whether firms can really ‘afford’ to offer out free services at all. Analysis of how much time is given away to who, how often, and by whom will determine whether certain projects are ‘worth it’. More in-depth analysis might even reveal which have gobbled up more time than managers might initially have thought, and what capacity employees have for being able to ‘give’ more of their time away to pro-bono activities.
It’s just that this can’t be done by putting your finger in the air, Time recording systems are essential for understanding just how much of our most precious resource can be apportioned to clients that may not generate any direct money.
No matter how altruistic you are, charity begins at home – and that means being kind to yourself by working out how much time you’re able (and willing) to give away. Tracking all work, no matter how much you’ve charged for it, gives you an overall picture of the cost and benefits of providing part of your project work for free.
Tracking billable and non-billable utilisation as part of your project time tracking is included in Appogee Time. Check out our 14 day free trial or request a demo today!