Profitability is simply revenue minus costs. For freelancers, it's not just about how much you earn—it's about how much you keep. You can be busy and broke, or selective and profitable.
Why Freelancers Must Track Profitability
Being busy doesn't mean being profitable. You need to know:
- Which clients are worth keeping
- Which projects make you money
- Where your time is best spent
- Whether your rates cover your real costs
Without tracking profitability, you're flying blind.
Revenue Isn't Profit
Common mistake: thinking your invoice total is what you earned.
Example:
- Project revenue: $5,000
- Your time: 60 hours
- Contractor costs: $1,500
- Software/tools: $200
- Actual profit: $3,300
- Effective hourly rate: $55 (not the $100 you charged)
Per-Client and Per-Project Analysis
Track profitability at multiple levels:
Per-Project
Some projects look good on paper but kill your margins through scope creep, difficult stakeholders, or underestimation.
Per-Client
Some clients are consistently profitable. Others demand endless revisions, pay late, or negotiate every invoice. Fire bad clients.
Per-Service
You might make great money on web development but lose money on content writing. Double down on what works.
Improving Profitability
You have three levers:
- Raise rates - The fastest path to higher profit
- Reduce costs - Cut wasteful expenses and tools
- Work smarter - Improve efficiency, reduce unbillable time
Most freelancers focus on working harder. That's the wrong lever.
Chronobill tracks time, expenses, and revenue per project and client, automatically calculating profitability metrics so you know exactly where your money comes from.