I’ve been freelancing for a while, but I haven’t kept a close eye on profit margins for my services. I know my rates and basic costs, yet understanding which services really bring in profit is a challenge for me.
It’s time to get organized and figure out why some projects seem to take more out of me than they’re worth.
I mostly just check if I made money afterward.
Pick three recent projects and calculate the real numbers for each one. Write down what you charged, what you spent, and how long it actually took you.
Once you see those numbers, you’ll know which services are worth your time. I do this check every few months and it always shows me something I missed.
The projects that felt exhausting usually have the worst margins when you actually do the math.
Start with one project and work backwards. Take what you got paid, subtract every dollar you spent on it. Include your time at whatever hourly rate makes sense for your area.
The number left over is your actual profit. Do this for 5-10 recent jobs and you’ll see which services are making money and which ones are costing you.
I track three things: what I charged, what it actually cost me, and how many hours I really spent. Most people guess at the hours and wonder why their margins look wrong.
Track everything separately for each service type. Here’s what I do:
After each project, calculate your real hourly rate. Take total payment minus all costs, then divide by actual hours worked.
The projects that drain you usually have terrible margins. Once you see the numbers, it becomes obvious which services to focus on and which ones need higher rates.
I use a simple spreadsheet with columns for each cost type. Nothing fancy needed.
I learned this the hard way after a few projects where I barely broke even.
For each service, I track my real costs first. Not just the obvious stuff like software, but also my time for things like emails, revisions, and phone calls. I started timing everything for a month to get realistic numbers.
Then I look at what I actually got paid versus those real costs. The eye opener was realizing some clients who seemed easy were actually eating up tons of time with little requests.
Now I have a simple rule - if a service type consistently shows margins under 40%, I either raise prices or stop offering it. Had to drop two services completely because they just weren’t worth the headache.
Keep it simple though. I just use one notebook where I write project name, hours, costs, and payment. Review it monthly and you’ll spot patterns fast.
I just keep it simple. Write down what I spend and what I make on each job.