How do I calculate my billable hours?

Asked by: Janis Bins DDS  |  Last update: November 27, 2023
Score: 4.8/5 (16 votes)

Calculating billable hours is straightforward: you take how much you've worked and multiply it by your hourly rate. But, the complications arise when you charge different fees to different clients, or when you have a diverse team doing differently paid work, and you need to factor in all those different rates.

How do I calculate billable rate?

  1. How to Get Billable Rate.
  2. The calculation for your billable rate is:Cost per billable hour + overhead per billable hour x (profit margin)
  3. “Per Billable Hour” - What Is The Hour?
  4. What is The “Cost” in Cost/Billable Hour?
  5. Overhead Per Billable Hour.
  6. Before Moving on to The Profit Margin, Let's Remember...
  7. The Margin Piece.

How many hours a week is 2000 billable hours?

For example, if you want to reach a goal of 2,000 hours annually, you would need to bill for roughly 40 hours each week, or eight billable hours a day.

What is an example of a billable hour?

Billable hours are quite simple; these are the ones you charge your clients for work directly done on their projects; for example, the hours of a developer working on a new webpage, administrative work, or other project activities.

How many billable hours in a day?

This means a goal of approximately 7.7 billable hours per day — if you don't take a vacation, get sick or work weekends. Research shows that as much as two hours per workday is lost to non-billable tasks.

How to Calculate Your Billable Rate ︱Invoicing Series︱Part 3

38 related questions found

How do you bill clients hourly?

Here's a checklist of the information that you should include in an hourly invoice:
  1. Label as an invoice.
  2. Your name and contact information.
  3. Invoice number.
  4. Date of the invoice.
  5. Billing period.
  6. Client name and address.
  7. A breakdown of services rendered.
  8. Hourly rates.

How many billable hours are normal for a week?

But the reality is you're probably not billing a full 8 hours per day. We surveyed 100 companies and found that most service-based companies that bill hourly require employees to bill at least 31 hours per week. 52 weeks x 31 hours = 1612 required billable hours by most companies in one year.

How many billable hours is 1800?

If the goal is to work 1800 billable hours each year, that translates into 2420 total working hours, without taking any sick or personal days or accounting for the commute, with a 10 hours workday.

How much of your time should be billable?

The commonly-held estimate of billable time lies somewhere between 60-80 percent, which is known as the utilization rate. While that range may seem large (it is) and anything under 80 percent may sound low (it does), non-billables vary by industry, and many tasks deemed non-billables actually help companies grow.

How do you calculate hourly rate?

First, determine the total number of hours worked by multiplying the hours per week by the number of weeks in a year (52). Next, divide this number from the annual salary. For example, if an employee has a salary of $50,000 and works 40 hours per week, the hourly rate is $50,000/2,080 (40 x 52) = $24.04.

What does 100% billable mean?

Billable hours can be of any percentage value, e.g., 80%, 90%, or even 100%. For example, in100 billable hours, the client pays a consultant for every hour they spend on the project., the client pays a consultant for every hour they spend on the project.

What are billable hours vs actual hours?

For instance, you work on drafting a document that takes 25 mins and your rate for the matter is $100/hour with a 6 min increment. Your actual hours will be 25 min but your billable time will be 30 mins because the actual time is 25 min which is 1 min more than 24 (a number that is evenly divisible by 6).

Does PTO count towards billable hours?

Totaling billable hours takes into account how many paid holidays and vacation or sick days each tech gets in a calendar year, so grab your PTO calendar and start counting.

Do meetings count as billable hours?

When working for a client, any tasks you complete on their behalf count toward your billable hours. These tasks will vary by industry or profession but may include: Attending project-related meetings. Completing and reviewing work for the client.

Do I get paid for non-billable hours?

Instead of thinking of non-billable hours as time you can't get paid for, you should think of it as an investment in your organization's future. You won't get paid directly for it, but the non-billable effort you put in now will help you increase profits and grow your business over time.

How many hours do most lawyers bill?

The average billable hours for an attorney is 1,900 hours per year. This means that if you work 40 hour weeks, you'll be able to complete 2,080 billable hours in a year before taxes. If you work 50 hour weeks, then you'll be able to complete 3,000 billable hours annually before taxes.

How many billable hours is 2080?

260 days x 8 hours = 2080 billable hours in a year. However, bear in mind that the value may vary depending on the local public holidays and working days for your company. If your business operates on the weekends and holidays too, you may add some working days to the equation.

What is the average billable hours for a consultant?

The number of hours you billed for divided by number of hours out of the week (generally 40). Most consultancies will expect you to bill 70-95% of your 40 hours per week, depending upon the industry and your level of seniority.

What are the disadvantages of billable hours?

Knowing the client is going to be monitoring those hours and each hourly achievement might cause some people to feel added pressure, work faster, and make mistakes. Hourly billing may also make it harder to present your client with the most accurate estimate for the completion of the work.

What are billable hours in timesheet?

A billing timesheet (also known as a time card) is a document used to record daily work hours. Some of the information usually contained in a billing timesheet include: When the workday commences and ends. Hourly rate for each task.

What is the ratio of billable hours to salary?

3:1 is a standard billing rate to salary ratio in consulting and other professional services firms. This standard is also known as the "rule of thirds", as the billing rate includes one-third salary, one-third overhead and one-third profit. How is budget billing calculated?

How do I start billing clients?

Key Takeaways
  1. Establish clear payment terms in a contract.
  2. Keep meticulous records of time spent on the client's project.
  3. Create a professional and detailed invoice.
  4. Send the invoice promptly after completion of the work.
  5. Follow up on any unpaid invoices in a timely and professional manner.

How does billable time work?

Billable hours are the amounts of an employee's work time that can be charged to a client. Employers charge clients at sometimes varying rates for different employees.

What is the difference between billed and billable hours?

billable work: Direct work for a client's project, where you are applying your skill to meet their needs, whereby people would be willing to pay you whatever professional rate you charge. billed work: A subset of billable work for which you are actually paid.

Can employers ask what PTO is for?

Can an employer ask why you need time off? There is no federal law mandating paid time off (PTO), so employers are generally within their legal right to ask you how you're using your time unless the circumstances described above apply to your case.