Freelancer Finance, Part 4: Making Sense of Billable vs. Non-Billable Hours
In the previous installment of this freelancer finance series, which argued against the feast-or-famine mentality, I mentioned that I work a maximum of 25 billable hours a week. A colleague asked how I divvy up my non-billable hours, which was an excellent question that also hinted at a common source of confusion: what tasks are considered non-billable, and why do they matter to us as editorial freelancers?
Let’s start by looking at some examples of both billable and non-billable tasks.
Don't assume that billable tasks comprise any time you spend working on a client project. This isn't true.
For example, will you bill the client for phone meetings? What about the time you'll spend researching, if applicable? Some editors charge for these kinds of tasks, and some don’t.
Here are some examples of billable tasks:
- The specialized skill that the client is paying you for (editing, proofreading, fact-checking, etc.)
- Phone calls and meetings with current clients
- Revisions, if applicable
I break non-billable tasks into two categories: business development and business administration. Business development includes any task that helps you build and expand your business, such as marketing and networking. Business administration is mainly made up of the nitty-gritty tasks that keep everything running smoothly, like invoicing clients and buying new equipment.
Here are some examples of non-billable tasks:
- Going to a networking event
- Interacting with potential clients
- Writing proposals
- Managing your social media accounts
- Updating your website, or blogging
- Following up with past clients
- Strategic planning
- Learning a new skill, or improving your current skills
- Preparing for a client meeting
- Drafting contracts
- Invoicing and bookkeeping
- Reading and replying to emails
- Managing current clients
- Project management
- Keeping your files organized
- Researching and buying new office equipment, supplies, or software
WHAT A FREELANCER'S WORK WEEK LOOKS LIKE
Only billing for 25 hours a week may seem outrageous to non-freelancers. After all, we’re taught that we should “work” (and get paid for) a 40-hour week. But in the freelance world, billing fewer than 30 hours a week is typical. (Side note: If you’re working more than 35 hours a week on client projects and still barely making ends meet, you need to raise your rates).
How many billable hours you enjoy working each week is completely up to you. Years ago, I used to work 50 to 70 hours a week on client projects, and it nearly drove me, and my business, into the ground. That wasn’t sustainable, and nowadays, I’m realistic about my own limitations. For example, I know that I can only work on billable tasks for about 4 hours a day before my attention starts waning and my productivity drops dramatically.
Here are two ideas for balancing your billable and non-billable hours throughout the week:
1. Break each workday into chunks
- 1 or 2 hours of non-billable business development or creative time in the morning
- Then, 4 hours of billable project work (with breaks)
- And finally, 1 or 2 hours of non-billable business administration to end the day (leave the repetitive tasks, like bookkeeping, for the end of the day when your brain is tired!)
2. Have a designated day for non-billable tasks
I’m always experimenting with new ways to structure my week, but I often use Wednesday as my designated “non-billables” day. Dedicating one day per week to all these tasks can work well, as you don't need to switch your brain back and forth between your billable client work and your (many!) other tasks.
On your chosen day each week, get a big chunk of administrative tasks done (especially the ones you tend to put off). You can also work on your business development by brainstorming new services or resources you could offer, scheduling social media posts, seeking out new referral opportunities, and attending networking events, online or in person.
PRO TIP: TRACK YOUR TIME
My secret weapon for managing my billable vs. non-billable hours? Tracking my time—and not just the billable projects. I track all the time I spend in the office, and then I review once a month in order to find ways to spend less time on non-essential tasks (like, say, checking my email 10 times a day).
I use a free, web-based app called Toggl to track my tasks, but a lot of freelancers also rave about Freckle, which includes detailed reporting features. Some productivity apps based on the Pomodoro technique, like Brain Focus, also include time tracking. I sometimes use Dubsado's time tracking tool, which automatically syncs to your client's invoice if you're working on a project that's billed hourly.
However you do it, tracking your time will help you get an objective view of how you’re actually spending your days. I was surprised when I looked at the reports and saw how scattered my tasks were throughout the day—no wonder I felt so frazzled!
Tracking your time is crucial if you’re serious about optimizing your billable hours, and it will also help you free up time for self-care, including regular breaks and vacations.
Did you miss the earlier installments of this series? Check out Part 1: What Is Your Actual Income?, Part 2: How to Better Manage Your Freelance Income, and Part 3: Why It’s Time to Drop the “Feast or Famine” Mentality.
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