Hourly Billing: Is It Billable Time?
In my previous post, I started poking into the advantages of billing on an hourly basis, instead of providing flat-rate pricing.
In many cases, it may not be as easy as saying, “I will bill hourly, across the board for every client and every project.” But for the purpose of this post, let’s say you’re onboard with the hourly billing model. You now have another major question to consider: What is billable time?
In this post, I will take a look at what you may consider billable, if there are any situations when you don’t actually bill for your time, and how to tell the difference.
What Is Billable
Typically, most freelancers and small business owners who bill on an hourly basis bill for any time that is spent working on a project or task that is directly related to the client.
There may be many other items that fall under billable time that are specific to you, but this is a list of the most common items that are considered billable:
- Actual work time
- Project planning
- Redrafting the project plan and timeline
- Reading and responding to emails
- Unscheduled calls
- Tracking tasks in a collaboration area
- Creating process documents of the work being completed
- Individual training or education specific to the client and work
- Training the client after the work is complete
- Travel time, if applicable
- Redoing work at the request of the client
What May Not Be Billable
Here are some instances when you may opt not to bill the client for your time:
- Initial consultation calls before a contract is signed
- Time spent drafting a proposal and contract for the work
- Training done on your own that results in knowledge you can use outside of this client/project
- Team-building or social activities if you’re a member of a team
- Time you put in that is considered beyond the scope of work you were hired for
- Time spent fixing your own errors
How to Tell the Difference
Deciding what time is billable and what is not isn’t always easy to do. Here are some of the questions to ask yourself to determine if something should be considered billable:
- Does the time spent benefit you directly more than it benefits your client?
- Did the time you spent help move the project forward?
- Was the time you spent specifically spelled out as billable in the contract?
- Was the time you spent due to a client demand or to correct a mistake by you?
- Would there be good will created if you did not charge for the time involved in a specific task?
The last question listed may be the most important in many situations. For example, if you spend an hour on a call with a long-term client and much of the time was spent chatting about non-work related topics, you may opt not to bill for a full hour.
Billable time can be a difficult gray area to navigate if you don’t have the parameters outlined in advance. And even then, it can be a subjective matter.
Do you bill hourly? If so, what is your general rule when determining what is billable and what is not?
Image credit: arkitekt