What Is a Billable Rate?

A billable rate is simply the rate you charge per unit of time for any professional service your company delivers to a client. Billable rates should take into account factors like overhead costs, project complexity, and the expertise of your staff. A well-calculated billable rate should balance the profitability of your business with the budget constraints of your clients fairly.

What is the difference between a billable rate and an hourly rate?

An hourly rate is what you charge for an hour of billable time, while a billable rate can be what you charge for a different unit of time. For example, you may wish to charge a set rate per workday or workweek. This could be useful if your team is working on projects that will take a long time to complete. In such cases, keeping accurate records of work hours could be tedious, unless you take advantage of high-quality time tracking software.

What time does a billable rate apply to?

Billable rates apply only to billable time. This typically doesn’t include time that was spent working on tasks that are not directly related to the project. An example of this is organizing tasks ahead of time with a time management strategy like time blocking.