*
I’m reading Jim Kramon’s “Smart Business for Contractors: a guide to money and the law” (2001, Taunton) and got confused about what he wrote on billable hours.
Here he’s talking about estimating work time, I’ll quote at length:
> Estimate the number of hours per week you work for which you get paid (billable hours). The important words here are “work for which you get paid.” You need to look at the time that you “work” and then take away time that you don’t get paid for [….]
> Take out the time driving to and from your jobs and to and from your suppliers.
> Take out lunch and breaks
> Take out time spent preparing estimates, talking with prospective customers [….]
> Take out any other time that is not for work performed.
Huh???
Am I confused or am I reading him right that he’s taking these things that I normally think of as overhead or even direct job costs and calling them ‘non-billable hours’.
I should add some background. Kramon says that when determining your hourly rate you should set what you want your annual income to be and how many hours you want to work, then calculate your general overhead, add that to your income, and divide the total gross earnings by how many hours you want to work. There’s your hourly rate.
Kramon does talk about general overhead and lists examples of it. So I’m confused about this ‘non-billable hours’ stuff.
He says that “a good estimate is that 70% of the workday is actual work time. That means that if you work a 50-hour week most of the time, your actual work time averages around 35 hours per week.”
Now wait a minute! I’m reasoning here that if your figured ‘hourly rate’ is 50 bucks per hour, and you work 50 hours per week, but bill for 35 hours per week, your actual hourly rate is 35 bucks per hour.
What is Kramon talking about with billable hours?
chrs, George
Replies
*
I'm reading Jim Kramon's "Smart Business for Contractors: a guide to money and the law" (2001, Taunton) and got confused about what he wrote on billable hours.
Here he's talking about estimating work time, I'll quote at length:
> Estimate the number of hours per week you work for which you get paid (billable hours). The important words here are "work for which you get paid." You need to look at the time that you "work" and then take away time that you don't get paid for [....]
> Take out the time driving to and from your jobs and to and from your suppliers.
> Take out lunch and breaks
> Take out time spent preparing estimates, talking with prospective customers [....]
> Take out any other time that is not for work performed.
Huh???
Am I confused or am I reading him right that he's taking these things that I normally think of as overhead or even direct job costs and calling them 'non-billable hours'.
I should add some background. Kramon says that when determining your hourly rate you should set what you want your annual income to be and how many hours you want to work, then calculate your general overhead, add that to your income, and divide the total gross earnings by how many hours you want to work. There's your hourly rate.
Kramon does talk about general overhead and lists examples of it. So I'm confused about this 'non-billable hours' stuff.
He says that "a good estimate is that 70% of the workday is actual work time. That means that if you work a 50-hour week most of the time, your actual work time averages around 35 hours per week."
Now wait a minute! I'm reasoning here that if your figured 'hourly rate' is 50 bucks per hour, and you work 50 hours per week, but bill for 35 hours per week, your actual hourly rate is 35 bucks per hour.
What is Kramon talking about with billable hours?
chrs, George