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Self Employed: What Goes into Your Billable Hour?

Written by: Merra Lee Moffitt

Article Overview: How do you determine what hours are billable? Click here to find out what billable hours you can charge to the client and what are the overhead hours.

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.

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  The Advantages Of Being Self- Employed

Article Tags: billable hours, billing questions, closing the deal, estimates, holidays, invoicing, junk mail, li li, managing your business, managing your business finances, marketing, money, plumber, proposal, sick time



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