Self Employed: What Goes into Your Billable Hour?

If you sell services, you only get paid for the time you are directly working for clients. The trouble is, there’s a lot of time the client doesn’t see you working on their behalf. When pricing your services, these “extra” hours need to be considered.

Time you need to average across all clients (Start keeping track of these so your estimates get more accurate):

  • Emails on their behalf
  • Invoicing, collecting payment, and answering billing questions
  • Writing the proposal and closing the deal
  • Waiting and checking to see if the client is ready for the next step

Time directly attributable to the client and billed correspondingly:

  • Traveling to/from their location
  • Researching something specifically for them
  • Building/delivering/doing/fixing their stuff (sadly, this is the only part they really “see”)
  • Revising (usually at the request of the client)

Time that is truly overhead, not attributable to specific clients:

  • Marketing
  • Selling (in general, not a specific client)
  • Managing your business finances (banking, taxes, management)
  • Hiring, managing, and training employees
  • Training to advance your skills and certifications
  • Vacation, sick time, holidays
  • Opening the mail including junk mail and spam email (yes sadly it takes your time)
  • Waiting for the phone to ring

For example, when we hire a plumber who charges us $75 an hour, we know he’s not really making $156,000 per year ($75 x 40 hours x 52 weeks). For every hour he works in someone’s house, he spends time getting supplies, invoicing, writing an estimate, and collecting the money.

So remember when you are figuring your rate per billable hour, there is a lot of effort the client doesn’t see but needs to be incorporated.  Let me know how your billable hours are calculated in the comments below.

Now stop reading about your billable hours and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at merralee@captureprofits.com.

This entry was posted on Monday, July 6th, 2009 at 8:50 am and is filed under Service Pricing Strategy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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