Why track time on fixed-price projects (and what to do with the data)
By SoloWOS teamPublished
IN SHORT
Tracking time on fixed-price projects shows your effective hourly rate: fee divided by hours worked. A $3,000 project quoted at 30 hours was meant to pay $100 an hour; if it took 43 hours, it paid $69.77. The gap, broken down by phase, tells you which part to price higher or limit in the next quote.
Prices and limits as of .
Key takeaways
- Effective hourly rate = fixed fee ÷ total hours spent, including calls, email and revisions.
- A fixed price puts the cost risk on you: US federal contracting rules describe firm-fixed-price as placing maximum risk on the contractor.
- In the worked example, revisions ran 11 hours against 5 estimated, more than the rest of the overrun combined.
- Use the gap three ways: raise the next quote, cap the part that overran, or bill it as a change order.
A fixed price is a bet that you know how long the work takes. Tracking time is how you find out whether you won. Nobody else sees these hours; they exist to make your next quote better. This post is part of the time and projects hub and works alongside how to price a freelance project.
Fixed price moves the risk to you
US federal contracting rules state the trade-off plainly. A firm-fixed-price contract has a price "not subject to any adjustment on the basis of the contractor's cost experience," and it "places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss" (FAR 16.202-1). Time-and-materials contracts, the hourly version, pay for hours worked at fixed rates (FAR 16.601). A freelancer quoting a flat fee has signed up for the first kind, so the only way to manage the risk is to measure it.
Worked example: a $3,000 project
A brand refresh for a small business, quoted at $3,000. The freelancer estimated 30 hours at a $100 target rate and tracked every hour, including calls and email, against the project.
| Phase | Estimated hours | Actual hours | Difference |
|---|---|---|---|
| Discovery and brief | 3 | 4.5 | +1.5 |
| Concepts | 8 | 9 | +1 |
| Revisions | 5 | 11 | +6 |
| Final files and guidelines | 10 | 12 | +2 |
| Calls and email | 4 | 6.5 | +2.5 |
| Total | 30 | 43 | +13 |
| Effective hourly rate | $100.00 | $69.77 | -$30.23 |
WORKED EXAMPLE
The math
Planned rate: $3,000 ÷ 30 hours = $100.00 an hour. Effective rate: $3,000 ÷ 43 hours = $69.77 an hour. The project ran 43 ÷ 30 = 1.43 times the estimate. To earn $100 an hour on the same scope, the fee would have needed to be 43 × $100 = $4,300.
What to do with the gap
The total says the project was underpriced. The phases say why. Here revisions took 6 hours more than planned, almost half of the 13-hour overrun, and calls and email added another 2.5. Concepts and final files were close to plan. That points to three options for the next similar project, and you can combine them.
- Raise the quote. Price the next one from actual hours: 43 hours at $100 is $4,300. If the market won't take that, at least you know what you're giving up.
- Cap the part that overran. Two revision rounds included, extra rounds at an hourly rate or a fixed price per round. Scope creep and change orders has wording for it.
- Change the process. Calls ran long: a written brief before the first call and one consolidated feedback list per round usually cut both.
| Effective rate vs target | What it usually means | Next quote |
|---|---|---|
| Above target | Your estimate was safe, or you got faster | Keep the price; consider a lower-risk scope to win more |
| Within 10% of target | Estimate was right | Keep the price |
| 10% to 30% below | One phase overran | Price that phase higher or cap it |
| More than 30% below | Scope was unclear or kept growing | Rewrite the scope, add change-order terms, re-estimate from tracked hours |
How to track fixed-price time without slowing down
- Create one project per fixed-price job, so its hours stay separate from hourly clients.
- Use the phase names from your proposal as entry descriptions, so reports group the same way your estimate did.
- Track calls and email too. They are where fixed-price projects lose the most hours.
- Record the estimate per phase in your project notes before the first hour, or you'll remember it as closer than it was.
Two numbers worth keeping in a simple list: estimated hours and actual hours for every finished project. After five or six, you'll see your own multiplier (here 1.43), which is the best input for the project cost calculator and for estimating how long the next project will take. Hours on fixed-price work also count toward your billable utilization.
In SoloWOS
In SoloWOS you track billable hours with a timer or after the fact, per project. On a fixed-price project, switch Billable off on its entries (or leave the project's hourly rate empty) so Add unbilled time never offers those hours on an invoice. Time Tracking > Reports, filtered to the project's dates, shows total hours by project; divide the fixed fee by that total for your effective rate. Invoice the fee itself as a line item, or in parts with a deposit from the accepted proposal.
Questions
How do I calculate my effective hourly rate?
Divide what the project paid by every hour it took, including calls, email and revisions. A $3,000 project that took 43 hours paid $69.77 an hour. Subtract any expenses you paid for the project from the fee first if you want the rate for your time alone.
Should I show my hours to a fixed-price client?
Usually not. The client agreed to a price for a result, and hours invite the question of why it took so long, or why it took so little. Keep the data for your own pricing.
Is fixed price or hourly better for freelancers?
Fixed price pays more when you estimate well and work fast; hourly is safer when the scope is unclear. Tracking time on fixed-price work is what lets you move from one to the other with evidence instead of guesses.
What if a fixed-price project is running far over the estimate?
Check whether the extra work is in the agreed scope. If it isn't, stop and price it as a change order before doing it. If it is, finish the work, then use the tracked hours to price the next similar project higher.
Sources
Facts checked against these sources on October 18, 2026. Rules and amounts change, so confirm them at the source before you file or sign.
- FAR 16.202-1, Firm-fixed-price contracts
- FAR 16.601, Time-and-materials contracts
- OPM: Computing hourly rates of pay using the 2,087-hour divisor
Last reviewed:
SoloWOS tools mentioned here
More on time and projects
- A 30-minute weekly review for freelancers (template)A copyable 30-minute weekly review checklist for freelancers: unbilled hours, overdue invoices, open proposals, next week's calendar and three priorities.
- Billable vs non-billable hours: what counts and how to price it inWhat counts as billable time, the non-billable tasks freelancers forget, and how to recover them through your hourly rate instead of the invoice.
- Client offboarding checklist: how to close a project properlyClose a client project properly: final invoice, file and password handoff, access removal, records to keep, a closing email and the review ask.
- How to build a client project timeline, counting business daysBuild a client project timeline in business days with review time as its own step. Worked example: a 6-week project around the 2026 holidays.
Run your client work from one account
14 days free, no card needed · Then Basic for $2/month.
Start your free trial