Quick answer
Software/hardware/insurance/accounting/marketing/training/gaps/bad debt all belong in Billable hours. Billable hours = working hours minus admin/sales/learning/gaps/rework.
Why it matters
Counting only direct costs understates your real survival line.
60-80% utilization is common.
Step by step
- Set a target annual income (keep pre/post-tax consistent).
- Add business costs/tax/insurance/gaps/margin.
- Calculate real billable hours per year, then divide to get the floor hourly rate.
- Calibrate with market/peer/closed-deal data; don't reverse-engineer a low price.
- State scope/payment/revision limits/rush fees in the quote.
Common mistakes
- Assuming 40 hours x 52 weeks are billable.
- Omitting tax/software/insurance/gaps/bad debt.
- Copying a competitor's low price without covering costs.
- Letting scope creep go unpaid.
Checklist
- Target income/costs/tax/margin confirmed.
- Billable hours reduced for gaps/admin/sales.
- Hourly/day/project rates use consistent assumptions.
- Market rate cross-checked.
- Quote includes scope/payment/revisions/rush terms.
Key facts
- 60-80% utilization is common.
- Gaps should be spread across the year.
FAQ
Which costs should Billable hours cover?
Software/hardware/insurance/accounting/marketing/training/gaps/bad debt all belong in Billable hours. Billable hours = working hours minus admin/sales/learning/gaps/rework.
How long does it take?
Usually 1-3 minutes; for intermittent issues, run 30 seconds and retest elsewhere.
Is data uploaded?
Runs locally and does not upload video/audio; extensions may still read the page.
Source: BLS