Why 2,080 is the wrong number
Forty hours times fifty-two weeks is 2,080, and nobody has ever billed it. Take off six weeks for holiday, public holidays and the odd sick day and you are at 1,840. Take off the thirty percent of your week that goes on quoting, invoicing, chasing payment, buying materials and driving between jobs, and you are at about 1,288.
Set a rate against 2,080 and you will earn roughly 62% of what you planned, work exactly as hard as you expected, and have no idea why.
What actually counts as non-billable
Time quoting work you do not win. Time invoicing and chasing. Time buying and collecting materials. Travel between jobs unless you charge for it. Your own bookkeeping. Training. Answering the phone to people who are shopping around.
Twenty percent is optimistic for most trades and most freelancers. Thirty is realistic. Running a business of one and doing all your own admin, forty is not unusual.
The rate that follows
Once the billable hours are known, the rate is division rather than judgement: the income you need divided by the hours you can sell. It is also the number to check a quote against, because a job that pays well per hour and takes three unbillable hours of preparation may not pay well at all.
Related calculators
- Freelance rate calculatorWhat to charge, with tax and time off
- Retainer calculatorThe monthly fee, and what an hour over the cap costs
- Hourly invoice calculatorHours and a rate, into a total
Questions people ask
What are billable hours?
Hours a client actually pays for. They exclude holiday, sick days and everything you do that is real work but not chargeable: quoting, invoicing, chasing payment, buying materials and travelling between jobs.
How many billable hours are in a year?
Far fewer than 2,080. A 40 hour week over 46 working weeks with 30% non-billable time leaves about 1,288 hours. The exact figure depends on your own time off and admin load.
What is a realistic utilisation rate?
Sixty to seventy percent of the hours you work is typical for a small business owner doing their own admin. Agencies often target seventy-five percent for staff who neither sell nor invoice.
Should travel time be billable?
It can be, and on trade work it often should be. If you do not charge for it, count it as non-billable here, because it is time you cannot sell to anybody else.
How do I use this to set my rate?
Divide the income you need by your billable hours. That is the floor. Anything charged below it has to be made up somewhere, usually out of your own time off.
Does this work for a salaried employee?
It works for anyone deciding what an hour of their time is worth. If you are comparing a salary against going out on your own, the freelance rate calculator adds tax and the benefits you would be replacing.