billable hours

What is billable hours?

Billable hours are the hours a service provider spends on work that can be charged to a client, as opposed to non-billable administrative or internal time.

Billable Hours explained

Billable hours are the foundation of time-based billing. Every hour you track against a client project is potentially billable. The distinction matters because non-billable time (admin, sales, billing cleanup) eats into your effective hourly rate. Freelancers who track 40 hours but only bill 25 have a 62.5% utilization rate — meaning 37.5% of their work week generates zero revenue.

Example

A web developer tracks 30 hours in a week. 22 hours are spent on client projects (billable). 8 hours are spent on invoicing, email, and sales calls (non-billable). Their billable utilization is 73%.

How this connects to Clockout

Clockout tracks both billable and non-billable time so you can see your real utilization rate and turn billable sessions into invoices without rebuilding the week from memory.

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Related terms

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Utilization Rate

Utilization rate is the percentage of total work hours that are billable. It measures how much of your work week generates revenue versus administrative overhead.

Non-Billable Hours

Non-billable hours are work hours spent on activities that cannot be charged to a client, such as administrative tasks, marketing, invoicing, and professional development.

Effective Hourly Rate

Your effective hourly rate is your total revenue divided by total hours worked (including non-billable time), showing what you actually earn per hour of work.

Time Tracking

Time tracking is the practice of recording how time is spent during work, typically by logging hours against clients, projects, or tasks for billing, productivity, or payroll purposes.