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Hourly Billing: Is It Billable Time?

By Alyssa Gregory

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
  • Research
  • Meetings
  • 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

  • wildscribe

    I find it hard to bill by the hour. Most of my clients want to know what the project is going to cost before it starts. In fact, I have gotten new clients from some of my friendly competitors because I don’t bill by the hour.
    The only time that I would bill by the hour is if I had do some tedious work, like converting a large static HTML site to a database site, but even then, I could write a Perl script that would do it quickly.
    Before I start every job, I always get the client to agree to an email stating what needs to be done. If the client changes their mind during the process, we will renegotiate.
    I have found that I can make more per hour by giving the client a flat rate than by charging say, $75 to $125 per hour. You just have to be good at estimating. I usually pad my estimates by two hours and I usually finish with a few hours to spare.

  • The Dev Department

    This is fantastic. I have recovered several thousand dollars per month of billing at my firm just by making sure that all “maintenance” time was accounted for and billed.

    We build sites for designers and wind up doing lots of support. When you are paying a staff, you have to be sure that as close to 100% of the teams time is billable as possible to ensure profit margins. It is really amazing how much things like, checking on an email routing issue or recovering a users Joomla! password can take. It really adds up.

    I know there are gray areas on this and that you will for sure not wind up billing all the time, but the first step is to start tracking and seeing just how much time you are losing. RescueTime.Com is a good start, or you can run a timer like Time Post for basecamp.

    At the end of the month, I import all the time into Freshbooks as monthly billing invoices and go through the list and decide which items will be billable. The great thing about that is that I can show that I did not billable work to the clients on the invoice as well. brownie points! yes!!!

    Great article.

  • Incitegraphics

    This is great information! I really had to stick to the plan and start charging all of my clients regardless of our relationship. Anytime I have to sit in front of my computer to work on your project, I absolutely have to charge. The last point you mentioned, “Would there be good will created if you did not charge for the time involved in a specific task?” really resonates with me. I help a lot of churches and not-for-profits with their websites. If there are minor text changes or images updates needed, I would do them for free. However the number of requests grew tremendously. Some people are great at taking your kindness for a weakness. It’s important to realize that at the end of the day you are helping them to earn money or grow their business. Why should your business suffer?

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