How to Track Hours per Client and Find Out Which Contracts Lose Money
Paul Boards ·
To find out which contracts lose money, log the hours on each task as the work happens, add those hours up by client at the end of the month, and compare the cost of those hours with what the client pays. The contract where the cost of hours exceeds the revenue, or comes close to it, is the one draining money from the business.
The math is simple. The hard part is having the data. Hours logged from memory on Friday tend to come in low, and that error hides exactly the clients who ask for the most changes. Below is a step-by-step guide to setting up time tracking, the formula for calculating contract margin, and what to do when the number shows up.
Why losses stay hidden
On a fixed-fee contract, revenue is the same every month. Cost varies with the client's behavior: extra meetings, out-of-scope requests, approvals that bounce back several times. Without logged hours, two clients paying the same amount look identical in your financials, even if one takes three times as much work as the other.
There's also the time nobody logs as a task: the twenty-minute call, the quick file tweak, the long email reply. Added up over a month, those bits tend to add up to a lot.
Step by step to track hours per client
1. Every task belongs to a client
If a task isn't linked to a client, its hours don't count. Set a rule that no task is created on its own. For internal work, like team meetings or training, use an "Internal" client and track that number too.
2. A timer on the task, not a spreadsheet at the end of the week
A timer running on the task itself records actual time. In Scrumboards, every task has a timer and logged hours, and the time report totals them by client, by project, and by person.
3. Log the small requests too
Create a recurring task for each client called "Monthly revisions and support." Every call or quick change gets timed there. At the end of the month, that task shows how much the client consumes outside planned deliverables.
4. Flag rework
When a deliverable comes back, the extra time spent is rework. Scrumboards' revisions report helps separate planned work from rework, which changes the conversation with the client.
5. Set your hourly cost
Add up salaries, payroll taxes and benefits, tools, rent, and other fixed monthly expenses, and divide by the team's billable hours. Use your own company's number, not a market rate. That's the hourly cost that goes into the formula.
Start counting today. Turn on the timer for this week's tasks and see, in the time report, how much each client consumed. Turn on time tracking per client for free.
The contract margin formula
With hours and hourly cost in hand, here's the math for each contract:
- Client cost for the month = hours logged for the client × hourly cost + direct expenses for that client (freelancer, tools, printing)
- Contract margin = amount received for the month − client cost for the month
- Margin percentage = contract margin ÷ amount received × 100
Run the numbers for three consecutive months before drawing conclusions. One bad month might be a campaign launch. Three bad months make a pattern.
Example with made-up numbers
A design studio has an hourly cost of R$ 90 and two clients on a retainer of R$ 6,000 per month. The figures are illustrative, just to show the math.
| Client A (bakery) | Client B (clinic) | |
|---|---|---|
| Monthly retainer | R$ 6,000 | R$ 6,000 |
| Hours logged | 38 h | 71 h |
| Cost of hours (× R$ 90) | R$ 3,420 | R$ 6,390 |
| Direct expenses | R$ 200 | R$ 450 |
| Margin | R$ 2,380 | − R$ 840 |
| Margin percentage | 39.7% | − 14% |
In the financials, both clients pay the same. By the hours, the clinic costs more than it pays. Looking at the revisions task, the studio finds that 22 of the 71 hours came from out-of-scope requests and three rounds of approval per asset.
What to do with a contract that's losing money
- Show the client the data. The monthly client report, shared via a link with no login, makes it clear how much was done and how much was revisions. Many clients don't realize how much they ask for.
- Redefine the scope. Cap revision rounds per asset or the number of meetings per month.
- Bill for the overage. Hours above what was agreed become an additional charge, based on the log.
- Raise the price at renewal. Use a three-month average of hours to propose the new rate.
- End it if you can't reach an agreement. A negative contract takes up hours that could serve a profitable client.
Bringing hours and finances together in one place
The formula needs two sources: hours from operations and revenue from finance. When they live in different tools, someone exports, cross-references in a spreadsheet, and the report runs late. In Scrumboards, the finance module with transactions, categories, and bank accounts sits in the same workspace as your projects. Access to these numbers is restricted: only people with finance permission can see revenue and margin, including when they ask SIGMA, the finance agent. The modules are shown in the platform overview.
What hours per person reveal
The same time report that totals by client also totals by person, and that second view answers questions finance can't. If a designer spends 60% of her hours on a single client, her stepping away from the account, for vacation or a departure, becomes a risk for that contract. If account managers log more hours in meetings than the creative team logs in production, the problem may be the approval process, not the size of the team.
You can also use the task status history, which shows who delivered each stage and when, to understand where work gets stuck. A task that sits five days in "waiting on client" doesn't use team hours, but it delays the next deliverable and often leads to rushing and rework later. Note these cases alongside the hours: they explain many of the months when margin drops even though the workload hasn't changed.
Mistakes that skew the numbers
- Logging hours from memory. Late logging underestimates time for the clients who interrupt the most.
- Forgetting management work. Planning and internal meetings about the client are also that client's cost.
- Using a market hourly rate. What matters is the cost of your own setup.
- Looking at just one month. Seasonality is misleading. Use at least three months.
Frequently asked questions
How do I calculate whether a client is profitable?
Multiply the hours logged for the client by your hourly cost, add direct expenses, and subtract the total from what they pay each month.
How do I calculate my team's hourly cost?
Add up the company's monthly costs, including salaries and payroll taxes, and divide by the team's billable hours for the month.
Do I need to track hours if my contract is a fixed fee?
Yes. Fixed-fee contracts are exactly where excess hours go unnoticed.
Will the team push back on the timer?
Explain that the goal is to measure clients, not monitor people, and show them the first report. Seeing their own work recognized usually helps with buy-in.
Is there a free plan to get started?
Yes, with no credit card required. Paid plans are listed on Scrumboards pricing.
Find your most expensive client
One month of logged hours already shows where the time goes. Create a free account and time your first client. If you'd like to understand the other modules first, start with the home page.