Professional Services Guide
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What are billable hours in professional services? Billing for professional services is an important process for every business, but it is not a one-size-fits-all function and can be complex. Let’s take a look at what are billable hours, how to calculate billable hours, and how this understanding can help your business in the future.

What are billable hours?

Billable hours are hours of completed work that the client can be charged for. For example, if your professional services company completes four hours worth of work for a client, they have four billable hours that they can charge for. 

Billable activities refer to any kind of work that is necessary for a project to be completed and can include creative and design work, administrative work, research, marketing, and more. 

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How to calculate billable hours

The first step in calculating your billable hours is understanding which work is billable and which is not. Establish the portion of your day that was spent on billable work, and split that down into hours. 

To calculate billable hours, professional services must have an efficient method of time tracking in place to ensure that they are being properly compensated for their work. These can include using an online digital time tracker like Clockify, keeping track of your hours at the end of each workday in a designated document or spreadsheet, or, what is probably the most efficient option, using a work management software platform like Wrike with in-built time tracking capabilities.

Once you know how many hours you need to bill for, calculating how much you are owed is pretty straightforward. You simply multiply your number of billable hours by your hourly rate. For example, say your hourly rate is $100 an hour, and you have done 10 hours of work this week on a project. Your invoice amount would therefore be $1000.