Self Employed: What Goes into Your Billable Hour?

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.