Now obviously you are not going to win every project that you tender for. Being the losing bidder is just a part of being in business. But so is accounting for and valuing your time, even when no paid work ensues from it. So how do you calculate the true cost of a unsuccessful bid?
Here’s one way: FreeAgent, the accounting solution for consultants and freelancers, allows you to subtract unbillable time from a project’s cost. When a project bid is unsuccessful, meaning the project had no positive cash value, the time and expenses placed into the project proposal are shown as a negative value.
Here’s how it works. You begin by setting up potential client’s project as an active project in FreeAgent before beginning work on the proposal. You then set up the tasks which go into a proposal – research, drafting proposals, drafting presentations, and in-person interview meetings – as active project tasks, but you mark them as unbillable. You also set up your hourly rate for the project at that stage.
How does it work in practice? Here is the summary screen of an unawarded project.
Let’s break this down. Under the Time tab, I logged the time I spent researching, drafting, proofing, printing, and posting the proposal. For this prospect, who submitted a detailed and complicated request document, the proposal work took a full eight hour work day. I also logged the time I spent creating a Prezi (2 hours) and delivering it to the prospect (1 hour). (All time tracking was logged as I worked via the MobileAgent app on my iPad, of course!)
Using FreeAgent’s expenses function, I noted the cost of posting the paper proposals (£3.05); the cost of having my VA proofread the proposal while cross-referencing it with the prospect’s RFP (£25.00); and the cost of a Skype top-up for the presentation to the prospect (£11.50). Naturally, all of these expense receipts have been scanned and uploaded to FreeAgent, and clicking on any individual expense will show the receipt.
This gives us the figure we saw on the summary tab. This unsuccessful bid cost me £33 in expenses and £413 worth of my time. Obviously the time loss is theoretical – I have not actually “lost” £413 – although it reflects what I could have made working on a billable project in that time.
If you use this method consistently within FreeAgent, every few months you can select Reports > Time Tracking Report and generate a report of all unbillable time across all projects, including the unsuccessful ones. That figure, a black-and-white account of how many weeks you have worked for nothing, can be a little scary. But knowledge is power. You can think about how you need to adjust your pricing structure to cover the assumption of regular unreimbursed time.