What Counts as Billable Time?

Client delivery is usually billable

If you are actively performing the work the client hired you to do, that time is normally part of the billable work.

That might include consulting, design, development, writing, implementation, analysis or other client-specific delivery.

The exact definition should come from your agreement with the client.

Client meetings can be billable

A meeting does not become non-billable just because you are not producing a visible deliverable during it.

If a meeting is required to deliver the client's work, it may reasonably be part of the billable engagement.

Again, this depends on how the work is priced and what you agreed with the client.

Someone charging a project fee may simply include meetings in the total project price rather than recording them as individual billable hours.

Client-specific research can be billable

If you need to research something specifically to deliver a client's work, that may form part of the billable engagement.

General learning is different.

If you spend a weekend learning a new piece of software because you want to improve your professional skills, that is usually part of running and developing your own business.

Sales time is usually non-billable

Finding the next client takes time.

You may write proposals, attend introductory calls, prepare estimates, answer enquiries and follow up on leads.

Those activities are necessary for the business, but the prospective client may never become a paying customer.

Your paying work therefore needs to generate enough revenue to support that non-billable time too.

Administration is usually non-billable

Running a business creates work that did not exist in quite the same way when you were an employee.

Invoices need to be created.

Payments need to be checked.

Expenses need to be recorded.

Insurance needs to be organised.

Emails need to be answered.

None of those tasks disappear simply because you cannot invoice a client for them.

Why billable percentage matters

Suppose you work 40 hours per week for 46 weeks per year. That gives:

40 × 46 = 1,840 working hours

If 75% of those hours are billable:

1,840 × 75% = 1,380 billable hours

Now suppose your business needs to generate $115,000.

At 1,840 billable hours, the required rate would be:

$115,000 ÷ 1,840 = $62.50/hour

But at 1,380 billable hours, the required rate becomes:

$115,000 ÷ 1,380 = $83.33/hour

Nothing changed about the amount of money you need.

The only thing that changed was how many hours you can actually invoice.

That is why your billable percentage has such a large effect on your rate.

Do not guess forever

When you first start contracting, you may have no idea what your real billable percentage will be.

That is fine.

Start with an assumption.

Then track your time for a month or two.

Record the hours spent delivering client work and the hours spent running the business.

Your own data will quickly become more useful than a generic benchmark.

Billable does not always mean hourly billing

You can still think about billable time even when you charge by the project, day or retainer.

It tells you how much of your available working capacity is generating revenue.

A fixed-price project that pays $5,000 but consumes 100 hours is economically different from one that consumes 30 hours.

Understanding your time helps you see that difference.

See how billable time affects your rate

The Price My Time Salary to Contractor Rate Calculator lets you change your billable percentage and immediately see what happens to your break-even and recommended rates.

Try changing 90% to 75%, then 75% to 60%.

The difference can be substantial.

For the full method, read How to Convert Salary to a Contractor Rate. For project work, see How to Price a Fixed-Fee Project Without Undercharging