Published on: 15.03.2019

This is written by the consultant/freelancer point of view.

Amateurs are focused on billable hours.

What is your hourly rate?
50$ per hours.
That is not bad, 8h time 50$ is 400$ per day.
20 working days per month is 8000$ every month.
96000$ per year, not bad.

There are a lot of problems in real life with this logic.

First, there are no expenses (tax, equipment, rent, etc) mentioned, like they do not exist.

But I do not want to focus on expenses in this analysis.

Also, can you bill for 8h every day for a year?

If on an average day you sell only 2h than calculations are much different (and not in a good way).

What about all the work that you need to do to sell 1h of your time?

If you need to spend one addition 1h in order to sell 1h of your time then your hourly rate is cut in half.

If you work for somebody else and you are not a remote worker, then your commute time is an example of non-billable hours.

Different businesses have different portions of billable and non+billable hours, just be sure to calculate that in your equations.

In coding business, and by coding business I mean if you primarily write code, lots of non-billable hours are spent on keeping with technology (even if you are highly specialized).

If you are self-employed non-billable hours are also needed for finding clients/work, infrastructure maintenance, etc.

If you take all that in the account than 50$ per hour and minus expenses, does not look so go anymore.

And you come to the understanding of why it should be more.