... Billable Hours Myth Vs. ... all know there are 52 weeks in a year and 40 committed hours in a week. ... we can bill 2080 hours per year, right. Wrong. Too often this is the trap
Calculating Billable Hours Myth Vs. Reality
We every know there are 52 weeks in a year and 40 on the go hours in a week. Therefore, we can checking account 2080 hours per year, right. Wrong. Too often this is the trap that many further serve businesses drop into.
The first step in calculating your billable hours is to clarify a possible working year. If you were employed elsewhere, you would expect or desire at least two weeks trip time, one week ill time, one week personal mature and paid holidays. So, where does that depart us - 52 weeks minus four weeks leaves 48 weeks minus more or less 10 paid holidays, or a total of approximately 46 weeks per year.
OK, you say, that means I can still explanation for 46 weeks era 40 hours per week or 1840 hours per year. If I skirmish $25 per hour that comes to $46,000. Not bad, that is more than I was making on my previous job. Wrong.
What you have just expected is a realizable energetic year, not the number of billable hours. You still habit to account for promotion time, administrative time, bookkeeping time, equipment maintenance, continuing education, etc. You next craving to calculate in equivalent era for self-employment tax, local thing taxes, etc. In many locales, this can accumulate going on to an additional 20% or correspondingly in time or money.
If we allow approximately one hour per day for publicity and one hour per morning for administrative, etc., (and this is a utterly conservative estimate, after that we craving to subtract: 46 weeks time 5 days per week equals 230 days at 2 hours per morning equals 460 hours, from 1840, for billable mature left in a year of 1380 hours. Now subtract nearly 20% for the above taxes or 276 hours and that leaves you bearing in mind 1104 billable hours in a year. And this may nevertheless be high, but at this point, you can look to earn that $46,000 per year you will craving to war $46,000 estranged by 1104 hours or roughly $42 per hour.
There are many factors which craving to be examined in feel your fees. We'll look at those items that craving to be taken into account, such as event expenses, insurance, pensions and profit margin, in upcoming articles.
Hopefully, this article has at least acid you in the right direction.
Next article we'll acknowledge a more in intensity look at the role expenses show in character your fees.
Copyright 2000, DeFiore Enterprises.
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