Why do billable hours matter? (2024)

Why do billable hours matter?

The biggest claim of proponents of the billable hour model is that charging by the hour promotes productivity. If only the work you do for the client matters, then you're more incentivized to actually do that work, rather than some of the other things you might have on your plate.

Why are billable hours important?

Billable hours are one of the most basic metrics that a project manager can look at when determining the profitability of an organization or project. The idea behind billable hours is simple: if you bill more hours than your costs, then you are making money for your organization.

How many billable hours are realistic?

Employer Expectations

But the reality is you're probably not billing a full 8 hours per day. We surveyed 100 companies and found that most service-based companies that bill hourly require employees to bill at least 31 hours per week. 52 weeks x 31 hours = 1612 required billable hours by most companies in one year.

How many billable hours do most law firms require?

Requirements for law firm billable hours

This means that some lawyers are working anywhere from 70 to 80 hours per week every week just to meet their billable hour minimums which can range between 1700 and 2300 hours a year.

What percentage of hours should be billable?

The commonly-held estimate of billable time lies somewhere between 60-80 percent, which is known as the utilization rate. While that range may seem large (it is) and anything under 80 percent may sound low (it does), non-billables vary by industry, and many tasks deemed non-billables actually help companies grow.

What does 80% billable mean?

To state a billable hour example, suppose the contract of a ten-hour project states that 80% of the total working hours will be considered billable. In this case, the client will pay the consultant eight hours even if they have spent ten chargeable hours.

Why are billable hours bad?

In some firms, this can lead to unethical behavior. Attorneys may engage in work that is purposely duplicative or unnecessarily detailed just for the sake of consuming time. Hourly billing may also lead to stealing from clients by augmenting or even fabricating hours.

What happens if you don't hit billable hours?

In busy years, firms may keep on associates who don't hit their billable targets, but in slow years, firms will likely look to those same associates as the first to ask to leave. You can certainly not hit your billable target one year and not get fired, provided your performance reviews are still good.

How many hours a week to hit 2000 billable hours?

How many hours a week must you work to hit 2000 billable hours? To achieve a yearly target of 2000 billable hours, aim for an average of 40 hours per week across a standard 50-week work year. Yet, it's crucial to account for vacation time, holidays, and non-billable activities that impact weekly billable hours.

Does PTO count as billable hours?

[PTO] —Non-billable time off or PTO hours.

How do lawyers track billable hours?

Lawyers can track billable hours with a billable hours chart, which will save them the time, effort, and frustration of calculating the hours manually. Most lawyers bill in standard increments, with 1/10 of an hour (six minutes) as a common increment.

What is the ratio of billable hours to salary?

Start with asking whether you are billing more than three times your salary. Most lawyers have a billable hour target set by the firm. Multiply the target by your hourly rate. Divide by three.

Is 1800 hours a year a lot?

When you assume eight paid holidays and about 10 days of PTO, the U.S. average, your typical employee will work between 1800 and 2000 hours a year. Meanwhile, if you work 52 weeks a year and don't take any PTO, you could work an average of about 2080 hours per year.

What professions use billable hours?

What is the average billable hours target?

The proliferation of aggressive annual targets arose at this historical moment. Fast-forward to today. At many of Bay Street's top firms, the average associate lives under an annual billable-hour target between 1,750 and 1,900. Those figures translate to about seven and seven-and-a-half billable hours each workday.

Are billable hours stressful?

Mental Health Concerns: The pressure to meet billable hour targets can lead to increased stress, anxiety, and even depression.

What doesn't count as billable time?

Billable hours are the hours spent working on client projects. Non-billable hours are any that are spent on administrative or overhead projects that are not directly related to client service. For example, sending emails to clients would count as billable time.

How can I improve my billable hours?

Make sure you're spending most of your day focusing on tasks that result in a higher billable time, and hand off the rest. Your team will appreciate the trust you instill in them to get the job done. If you're struggling with letting go the right way, take a look at our article on the five steps of delegation.

What is the difference between billable hours and actual hours?

The definition of billable work might vary depending on your industry, but it usually includes client meetings, documentation and research, client-related traveling, and all specific tasks that contribute to project delivery. Actual Hours: Encompasses all of an employee's working hours.

What is difference between billable and non billable hours?

Also non-billable are the hours which are for the client, but aren't for tasks that would reasonably be considered billable :this might include calls/meetings with a client to go over project progress, or time spent researching the client's business.

How many billable hours in a year?

260 days x 8 hours = 2080 billable hours in a year. However, bear in mind that the value may vary depending on the local public holidays and working days for your company.

How many billable hours in a month?

It might look like this... You should see a solid chunk of billable hours (north of 36 hrs), and a couple of line items related to the company or your team. Most consulting companies estimate that there are 168 billable hours in a month for each billable person.

What is the average billable hours for Paul Weiss?

The firm has no billable hour requirement, but the general expectation is 2,000 hours. The firm has no true face time requirements as long as the work is getting done. The firm offers alterative scheduling to all associates, not just those with family obligations.

What is productivity billable hours?

Your billability is the number of your productive hours that you can charge to your customer. Each company has its own percentage for the billability rate it aims for; in most companies, this is approximately 70%. Because every company has costs, it is important that most hours worked to generate money too.

How do you calculate billable hours?

Calculating billable hours is straightforward: you take how much you've worked and multiply it by your hourly rate.