A colleague asked me this general question, and I turned to Chat GPT 4 to quickly get a spectrum of answers.
User
I am a physician consulting to medtech businsses and bill $500 an hour. The client wants me to fly from Los Angeles to New York (an all day trip) on Monday, for a 3 hour meeting on Tuesday. Then I have an 8 hour trip back home. Billing them hourly for all the out of office time seems excessive (20 hours?). Billing them only 3 hours for a 2 day trip seems unfair to me. What are common and good ways to resolve this? Perhaps there are a few recognized options I'm not aware of.
ChatGPT
Balancing fair compensation for your time with maintaining a good client relationship is crucial, especially when travel is involved. In the consultancy and medtech fields, there are several recognized approaches to billing for travel time, which aim to be fair to both parties. Here are some common strategies:
1. Bill for Actual Meeting Time Plus a Travel Day Rate
Instead of billing your full hourly rate for travel, you could charge a reduced rate for travel days. For example, if a normal day is 8 hours of billing at $500/hour, you might charge a flat rate equivalent to 4 hours of your hourly rate for each travel day. This compensates you for the time while acknowledging that you're not providing full consulting services during travel.
2. Travel Time at a Reduced Rate
Bill for the actual meeting hours at your full rate, and then bill the travel time at a reduced rate. This could be 50% of your hourly rate. This approach recognizes the value of your time while also acknowledging that the travel time is not as valuable as your direct consulting time.
3. Flat Fee for Travel
Some consultants opt for a flat travel fee that covers all travel-related expenses and time. This could be a standard rate based on destination (e.g., cross-country vs. within the same state) and would be in addition to the billing for actual consulting work. This method is straightforward and avoids the need to calculate hours, but setting the right fee requires understanding your travel expenses and time commitment.
4. Expenses Plus Daily Rate
Another approach is to charge for all travel expenses (flights, hotels, meals, etc.) plus a daily rate that covers your time. The daily rate can be less than what you would earn in a day of consulting to reflect the nature of travel time but still compensates you for being away from your office and other potential work.
5. Include Travel Time in Overall Project Fee
If you're working on a project basis, consider incorporating travel time into the overall project fee. This way, you're not billing hourly for travel, but the cost is covered in the total project cost. This requires estimating your time and expenses accurately to ensure fair compensation.
Client Communication and Agreement
Whatever method you choose, clear communication with your client about your billing practices for travel is key. Explain your rationale so they understand the value you provide and the costs involved. Ideally, this should be agreed upon in advance to avoid surprises or disputes.
Also, consider the frequency of travel and the overall value of the client relationship when determining your approach. If travel is infrequent or the client provides significant business, you might opt for a more lenient billing method for travel to maintain a positive relationship. Conversely, if travel becomes a regular part of your engagement, ensuring you're fairly compensated for your time and expenses is crucial.
By adopting one of these strategies and communicating openly with your clients, you can find a fair and mutually agreeable way to bill for travel that respects your time and expertise.
