Project Management optimize

Justify charging clients drive time

Drive time costs could jeopardize your consultancy's profitability. Read tips on calculating and talking to clients about drive time charges.
Ancillary charges frustrate consumers; hence the uproar over surprise cell phone fees and debit card costs. For that reason, many technology consultancies (mine included) typically avoid charging for drive time. Depending upon the circumstances, you may wish to revisit that decision, however.

Drive time charges aren't just for plumbers anymore

Plumbers, electricians, HVAC firms, and other technicians levy "truck charges," "drive time," and even vague "materials" fees, as I was reminded following minor plumbing service this summer. Did it make me angry? Yes. Does that mean these extraneous charges are unwarranted? No. But smart service companies should work harder to explain such fees.

In the case of a simple plumbing repair, I was charged a truck fee and a materials charge, even though I provided the parts. Curious. I was so busy I didn't have time to dispute the invoice (which was almost doubled by these add-on expenses), but I will rethink which plumbing company I call the next time I need help.

Many ancillary charges are justified; for instance, few hesitate to question environmental disposal fees when changing their oil. The last thing, though, that technology consultants focused on delivering quality service to clients want to do is anger a client with silly or inane charges.

Therein lies the rub. Drive time charges aren't always inane; sometimes those ancillary fees are necessary.

A justified expense

Most firms aren't going to levy drive-time charges for clients located within 20 minutes or so of their office. Unfortunately, life isn't that cut and dried. What happens when a good client asks you to travel to a remote office two hours away? Or what if a one-time customer needs you to complete a complex project requiring several on-site visits 90 minutes away?

Depending upon the project, you may just eat those costs. However, there's nothing wrong with charging a client for the required drive time. The key is to be sure you discuss it with the client upfront, and you both agree on an arrangement that's fair.

Drive time costs add up

Some readers might think time spent driving is simply a cost of doing business, and in many cases that's true. Sometimes, though, the costs are very real and jeopardize a consultancy's profitability. To truly understand the costs your office incurs if it sends two technicians two hours away three times for one project, multiply the technicians' hourly rate times the amount of time they're on the road (which means they're unavailable to work for other clients). In the case of techs charging $125/hour, the opportunity costs for such a project reach $3,000 (four hours round trip times three trips times two technicians times $125/hour).

Thus, it's incumbent on tech firms that travel to capture those costs. Your best bet is to be upfront with clients and review drive time fees before they show up on an invoice. Avoiding surprises is almost always a good idea in business, but especially when it comes to billing practices.

Also read Chip Camden's IT Consultant post Billing clients for travel time.

About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

8 comments
VMXTECH
VMXTECH

I work in an IT saturated area. My fees are kept low. Every penny counts. Including the clients. Especially in this economy. I do not object to justifying cost of work or 3rd degree so to speak from the client. Now then. When establishing fees with a new client, travel expense are added into the conversation. If the client is giving you the run around why they should not pay your "reasonable" (and it must be reasonable) rate then rethink whether you want them as a client. If they are bulking at this cost then think what they will do once you have them as a client. Here is one example: They call you for problem X. You arrive and take care of problem X. After explanation of repair and billing they claim they should not pay since they could have done it themselves or it did not take you a long time to fix problem x. You can add additional reasons any sane person would shake there head at. In summary, my personal experience with these types of clients is they expect something for nothing. A lot of time and productivity will be wasted getting your fees or giving them free service to get paid. If you had taken them on as a client and you give into this then they will continue the behavior. You may want to rethink whether keeping them is worth it. Note1: And yes if I am on a job site and receive a call, unless the call is some sort of emergency, (business or personal) then they will be called back. I too will not pay to have some one else's problem fixed on my dime. Note2: Sorry, but calling while travelling to take care of problems while on the way to another clients and being billed is not hypocritical in this industry or any other.

JohnMcGrew
JohnMcGrew

...for clients over 30 minutes away. I simply had to. When hardware and software was far less reliable than it is today and before complete remote access was ubiquitous, I was all over the place. An emergency call to the other end of the next county could easily consume almost an entire working day for what was less than an hour of actual work. In order to make that call worthwhile economically, I have to charge for at least some of that time in the car. Fortunately, most of my clients are happy to pay that to see my face. As a courtesy, I would try to bundle clients in a certain area together for calls on a single day, and split the travel time between them all. They'd all appreciate that, and it built substantial good will amongst the clients who'd frequently be happy to wait a day or two until I could line up a whole day of meetings in a given area.

reisen55
reisen55

I have two sets of client groups - very very local and relatively distant with one in New York City. Very local count as 15 min away, so I don't even bother. But distant is about a 40 minute drive, with a caveat in that three happen to be in the same small medical complex so they pay for each other. Two more are within 5 min of this building. Manhattan is a once-monthly and I have factored train and subway into the equation. But it is the price of gasoline, compared with 3 years ago, that hits directly and I am considering such a line item addition for 2012 contracts.

HAL 9000
HAL 9000

Particularly when you do on Site work of any kind but for those long Away Trips it's a different story where the best part of a day can be lost in driving to and from a remote location for at best a couple of hours Invoice Time. But even still I have yet to run across any company who wants to argue these charges they just accept them as part of doing business. Some even fly me and my staff to the location and by that I don't mean on Commercial Aircraft. There is a Sand Mine locally only about 45 minutes away provided that you hit the Ferry to the island at the right time or it could be a couple of hours and 45 minutes away if you just hit the ferry terminal as the ferry pulls out. That place gets me to drive to the local Airport and flys me in their chopper to their operations and flys me back. I would very much consider that having the Chopper and Pilot available for my & my staff transport costs considerably more than any Drive Time and Ferry Time that I would incur but then again it also saves them an enormous amount of money when you consider Down Time which is measured in the Millions per hour. They own the chopper and the Pilot is on Call anyway so they may as well make use of him and his aircraft and the cost of Maintaince and Jet Fuel is minimal in comparison to the other costs involved or so I'm told. ;) Other places I've been flown in in Light Aircraft because Commercial Schedules are not suitable for the companies who I'm consulting for needs and these can be in Company Owned or Leased Aircraft always which the company that I'm consulting for organizes. On the occasions that I fly out to remote locations we don't talk in $ per Hour but daily rates. Col

polarverse
polarverse

While I don't charge my clients for drive time, I do charge for round trip mileage to at least cover the vehicle expense. Most IT service companies in my area do not charge for drive time which would give me a disadvantage if I did however clients are very understanding about mileage charges.

Alan_
Alan_

I do understand that billing opportunities are lost when consultants don't charge for drive time. However I can't agree with the statement "which means they???re unavailable to work for other clients". It's very hard to imagine they aren't on their phones conversing with other clients or doing business. Add that to the experience that many consultants aren't "mine" when they walk in the door and can spend significant amounts of time on the phone with other clients, who aren't getting billed for that time, and bill me for that time! IF the consultants are dedicated to MY PROJECT that they're billing me for from the time they walk in the door AND they aren't doing other consulting during their drive then I would be fine with some level of drive time charges. If this isn't what's practiced then I am loathe to pay drive time charges.

tbmay
tbmay

If the provider is willing to turn the cell of and commit to you completely, it makes for a very different situation. The question then becomes, "How much do you value that level of customer service?"

Sterling chip Camden
Sterling chip Camden

... I go off the clock for client A. I think billing for driving time has to be weighed by how much and how often, too. If you rarely drive for a client, and you don't anticipate doing it often, then throwing in the driving time makes for a good gesture (make sure they know you did that). If, on the other hand, most of your business involves driving to a site, that could become a significant revenue leak, and you might be justified for billing for it (or quietly covering it in your fee).