The PITA Tax

On her blog, Heather Boerner has an amusing and useful piece on treating pain in the rear clients as a class that needs to be taxed as part of an interview with Bob Sutton, author of The No Asshole Rule. The idea is to add up all the time you spend, including the minutes you fret over dealing with the client, and multiply that by your hourly rate. This is actually a cute variation on understanding the profitability of a client. You have to calculate not only the time for which you actually get to invoice, but that part belonging to overhead and personal time. Much of this you would ordinarily write off as part of your operational expenses (for example, you don't get paid for crafting pitches to clients). But if the time is significant, it may heavily cut down the profitability, because you're actually putting in more time than you can bill for.

I'd take my target hourly rate (How many zeros can I add?), not my bottom line "must make" number, and multiple it by all the time spent on the average for the client. Then take that total amount of money and divide by the number of billable hours. Whether you express this as an hourly figure to them or merely up your project fees doesn't matter. However, do be prepared to find a replacement client, because if the size of the new number doesn't kill him or her, there's a good chance the person will walk away. Ah, how sad.