When starting up a new freelancing gig or small business, billing hourly for your services is a good way to keep your workload and cash flow consistent. To get started, you’ll need a few steady clients and a good time tracking system. Once you’ve set out running, the next thing to figure out is what to bill. You are selling units of a limited resource called time, so the more of it you can account for, the better. There are three factors to consider when deciding how to bill for your time.

1. Billable types of work

To start with, you’ll need to decide what types of services you provide and how much you want to charge for each one. These work types will become the primary categories for approximately 85% of your billable work. These work types will depend on the nature of your business. At Pelago, a web development agency, we have categories like HTML Production, Javascript Production, Web Design, Server Side Engineering, Site Architecture, System Administration, and Database Design & Development. Because we track each of these work types, we are able to accurately bill clients based on the level of service we provide and quickly estimate projects for new clients.

2. Project management

Roughly 10% of your efforts on each project will go to project management, a billable type that can be difficult to track. Project management encompasses the time you spend keeping the project going; receiving and sending deliverables, assigning tasks, keeping tabs on subcontractors, and maintaining a vigilant watch over deadlines. Project management may not seem to have a direct impact on the final deliverables, but it is a crucial component and if you don’t bill for it you will bring down your overall billable rates by 10 to 20 percent.

3. Miscellaneous debris

A smaller percentage of the work you do will fall between the cracks. It is up to you to decide if you want to track and bill for it. For example, you may spend a few minutes each day corresponding with a client via email, providing your professional expertise in the process. If that time spent emailing adds up to an hour a week, a year will net you fifty-two hours of unbilled time. At a rate of $100 per hour, that’s $5,200 in lost time over the course of a year. At some point, the seemingly small things reach a tipping point and need to be billed. The tricky part is finding that point.

Coming up with a good tagline is no easy feat. One formula I have seen in abundance lately is “where x and y meet” which is a creative way to say your offering is a convergence of the previously unassociated. If we were to take this route with Intervals, our tagline would be “where time tracking and task management meet.” But that doesn’t really capture the two-parts-are-greater-than-the-whole benefit from combining these two features. A proper tagline should both juxtapose and associate these two features in a way that conveys ingenuity to the public.

For example, our tagline at Pelago is “logical design, creative engineering,” a clever play on word associations which promote our unique left-and-right-brained ability as a web development agency to crank out great design and build solid web sites.

As for Intervals, we’ll have to come up with something better, something that captures the effect of recovering lost time through easy-to-use time tracking, coupled with getting organized using intuitive task management. Intervals is all about team and client accountability, collaboration, and workflow, reporting on your business health, and working smarter. How do you say that in just a few words?

Stay tuned for an answer.

This month, Pelago celebrates its ninth year of life as a web development agency. In those nine years we’ve worked on 339 projects for 105 clients. We’ve built everything from basic brochure web sites to complex data crunching web applications. And we’ve dealt with just about every type of client you can imagine. Here are some lessons on running a web development agency that we’ve learned along the way.

1. Choose like-minded partners who share your vision

A typical web development agency will be started by multiple partners. It is important that the partners share common goals and have skills that are diverse in a complementary kind of way. You don’t want one person getting stuck with all of the peripheral duties like IT, HR, and Legal. It’s best if you can distribute these tasks across all owners. It’s like Tom Waits sings: “We’re chained to the world, and we’ve all got to pull.” You are in this for the long term, make sure your cohorts are too.

2. Don’t always be the nice guy

For whatever reason, some clients are known to make outlandish demands. These demands are harder to deflect when you are first starting out because you need the business. But as you become more established, you need to know when to be the nice guy and when to say no. The problem with being nice all the time is that it sets a precedent. You’ll say “sure, I can knock that out by tomorrow” because, what the heck, today is a slow day. The next time the client has a quick need, they won’t understand why you can’t help them out as quickly as you did the last time. If clients become too accustomed to quick turnarounds, they will start shuffling their internal deadlines around the expectation that you will be available at the last minute, and that is when you really get into trouble.

3. Do not apologize for your rates

It doesn’t really matter what other agencies charge as long as you trust that your rates are a fair price for the service you are providing. You know your business better than anyone else and what rates you need to charge to be successful. You are far better off taking on clients who want to work with you, regardless of the cost. Standing behind your rates and your work tells the client that you are confident and able. Being thrown into a pool of lowest bidders is insulting and a waste of time.

4. Be as clear as possible in your proposal

The proposal and resulting contract should articulate the specifications of the project with as much detail as you can muster. If there is any question about the deliverables, which there will be, you can refer to the spec. Without a clearly defined spec you are leaving the project vulnerable to disagreements that can ruin client relationships. It is also helpful to verbally iterate certain points of the contract before it is signed, in case the client skimmed it too hastily. For example, if you don’t offer web hosting as a service, make sure it is clearly spelled out. Otherwise, the client will expect you to get involved when a mac truck takes out the data center where their site is hosted.

5. Track your time and tasks

This is important enough that we rolled our own web-based time tracking software, Intervals, to manage our projects. Tracking time and tasks gives you invaluable data that can be used to accurately estimate new projects, gauge the health of current projects, and provide clients with detailed invoices. Without this information you will lose money on underestimated projects, fail to meet deadlines, and upset clients over money issues.

While working on the “email this page” feature in Intervals we needed to find a way to merge HTML & CSS files into a Frankenstein-like document that gmail would honor. Quick back story — gmail doesn’t play nice with conventionally defined CSS. We came up with the Emogrifier, a PHP utility we are adding to the Pelago collection of Sidecar Projects.

Visit www.emogrifier.com to try converting some of your web pages to gmail friendly emails and read more about the project. While you are there, feel free to download the source code for use in your own applications.

I once worked as a graphic designer for a small marketing group that would place ads for golf clubs in the backs of various magazines. These ads were typical of what you would see in the back of a magazine — volumes of text and photos crammed into the 8.5 x 11 confines of the printed page. Every one of my original designs, consisting of sharp photos elegantly contrasted with bold type, would be ‘art directed’ and morphed into an unrecognizable topography of condensed, crammed type. When I tried to protest I was rebuked with economics &mash; “this is expensive ad space,” the boss would say, “we have to fit in as much information as possible.”

This is a problem that plagues many a stalwart designer, and not just print designers. Here are five reasons why using negative space will make your message more successful when designing for the web.

1. Stop Shouting

With so many publishers and advertisers trying to get their message across, most web sites have become a cacophonous battleground. We can’t hear any one message over the din created by all of the others. When used intelligently, negative space will contrast your message into something like a whisper. When people shout at us we turn away. When they whisper, we lean in.

2. View Space from a Different Perspective

Like my previous boss, many advertisers see ad space as a waste unless it is filled with information. A contrasting, unconventional view is that the ad space is an opportunity to keep everyone else away from your message. Use negative space like a moat around your design, and protect it from those invasive neighbors. This can be especially effective when designing banners, which will be flanked by others in a side column of a web site.

3. Build Confidence

Another reason we over design for the web is that we worry our message won’t be understood. We dribble on with text and photos for fear that one reader may have missed the point. Using more negative space and saying less will establish confidence in your voice. People respect and listen more to those who choose to speak clearly and directly without saying too much.

4. Give the Eyes a Rest

When confronted with a web page too full of ads and content the eyes will have no place to rest, no place to focus on and start reading, and the reader will leave the page. Use negative space to direct the reader’s wayfaring eyes to a place they can rest. The readers’ brain will thank you for it by staying on the page and retaining what it reads.

5. Establish a Hierarchy of Information

Web designers are often faced with the challenge of putting a lot of information on one page and directing the reader through it. A hierarchy of information is more established when using negative space. And it can spare the designer from the clients’ demand to make everything bigger, bolder, and red.