# Billable Hours



## Magnettica (Dec 19, 2006)

I am about to go out on my own an EC. 

I am figuring 5 billable hours per day. 

Is this too little, just about right, or way, way off? 

I have figured my overhead at $91k for the year and that includes wages, phones, vehicle maintenance, vehicles, insurance, contractor insurance, computers, tolls calls, vacation pay, holiday pay, tax preparation, fuel, permits and licensing fees. 

I figured 243 working days, gave myself weekends off, 2 weeks vacation, and off for all major holidays. 

This comes to $374 per work day needed to cover these costs at 5 billable hours per work day and it breaks down to $74.00 per hour. 

I also have a plan B that has my rate at $61.00 per hour but then I have work on Saturday (work more charge less )

Ok, let me have it. Slam me, congratulate me, tell me I'm a bum, tell me I'm greedy, but just give me some feedback.


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## rbsremodeling (Nov 12, 2007)

Magnettica said:


> I am about to go out on my own an EC.
> 
> I am figuring 5 billable hours per day.
> 
> ...


My plumbers get 4-5 my electricians get 5-6. I would say you are spot on. We don't charge travel time per sey. But it is worked out in the fees we charge.

Jobs are broken down usually in 4 hour increments typically.


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## buildpinnacle (Sep 2, 2008)

For a one man show taking the billable hour from lead to accepting payment this is probably true. If you own a company and figure your salary as o/h and have men on T/M, the crews should get closer to 32-34 billable hours per week our of 40 hours of pay. Your probably not going to get any more than 1700 billable hours per year per man. That is probably stretching it.


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## Windwash (Dec 23, 2007)

Do you have anything in your OH for advertising/marketing/website? These could be big ticket items you need to cover.


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## Celtic (May 23, 2007)

Magnettica said:


> I have figured my overhead at *$91k for the year and that includes wages*, phones, vehicle maintenance, vehicles, insurance, contractor insurance, computers, tolls calls, vacation pay, holiday pay, tax preparation, fuel, permits and licensing fees.


ummm...just where do you live?
Where do you plan on living in 5 years?

Of that 90k...how much is your wage/salary ?
[don't give a number if you don't want to...but please, read on]

To me ... w/o getting too deep into the numbers game....it seems you want to run a business for wages.

Other numbers to consider:
- retirement 
- medical [you listed ins. 2x....1 for business, 1 for vehicles...none for you?]


I could go on, but I'll keep it short.......for now :shifty:


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## mahlere (Aug 6, 2006)

i'm onboard with Celtic...you're OH figure is low...

For example...

Salary - $60,000
Burden - (Employer SS and other payroll taxes) - $6000
health insurance - $6000
new truck payment - $6000
business insurance - $4000

shoot, we are already at $82,000 and we haven't even touched on fuel, truck maintenance, tools, phones, advertising, etc, etc, etc...

and you will probably be luck to get 4 hrs a day to start if you plan on doing service work...

if you plan on working for GC's (especially small resi ones) better add a healthy "Did not Pay" line in your overhead...cause they will beat you for money...

Mags, you may not get a $60k salary your 1st year....you may not have health insurance...but if you remember the movie "Boiler Room" there was a great line in there by Ben Affleck ..."Act as if...."

you need to figure the cost of a new van into your pricing so that when you go to buy one, the money is there...

good luck...


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## TxElectrician (May 21, 2008)

Mag, I'm taking it that you are planning on being a one man show for awhile. To me 5 hrs/man billable a day is low, my guys get about 6.5 - 7.0
Alot will depend on what type jobs/ projects/service you plan on doing and how you are able to schedule.

Also, you are probably basing your 5 hrs a day on a 8 hour workday. You may want to consider a plan C. Be prepared to work 12 or more a day - it will take it to do all the other jobs you will be taking on as a contractor that you didn't have to deal with as an employee.

In addition to your overhead ,don't forget to add the most important factor in your final rate - PROFIT.

Good luck and congratulations on getting set up as a contractor.:thumbsup:


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## Mike Finley (Apr 28, 2004)

Magnettica said:


> I am about to go out on my own an EC.
> 
> I am figuring 5 billable hours per day.
> 
> ...


I'd say you have a great start. Do you have it all figured out? Hell no, but who can? You're in a realistic ball park, and once you get going at a steady pace you'll adjust everything. 

This is the beginning so don't get too hung up on all the exact numbers, mabye you make less salary then you panned, but that's what happens in the beginning, the main thing is to focus on the long term and get through it all until you get comfortable.

Marketing is the one thing missing -- you'll probably be giving up those niceties like vac pay and holiday pay the first year. :laughing: 

Behind doing the work, getting the work is going to be pretty damn important and probably expensive. Shouldn't be hard to spend 15% of your first years gross sales on trying to figure out how to get steady calls.

(Permits shouldn't be an overhead)


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## silvertree (Jul 22, 2007)

Don't forget slippage (mistakes or accidents) I figure thats's worth another 2 dollars an hour.


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## Darwin (Apr 7, 2009)

I get about 5-6 billable hours per day; each job avg. 2hrs. Then figure in an hour between each job of drivetime.:thumbsup:


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## Tom M (Jan 3, 2007)

How are you going to work in a profit? Your hours cover a salary and cost of doing business for a comfortable time frame but wheres the main goal---profit? 

Do you plan on serving GC'S, builders or your own homeowner service? Does charging per fixture like some electricians do equal the same safety net or does it lose money in comparision to the hourly rate? I would think the billable hours are safer but not always practical. If I had a renovation and you pulled a bid off the plans I would expect you to honor that bid. (excluding changes)


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## Darwin (Apr 7, 2009)

tom m said:


> How are you going to work in a profit? Your hours cover a salary and cost of doing business for a comfortable time frame but wheres the main goal---profit?
> 
> Do you plan on serving GC'S, builders or your own homeowner service? Does charging per fixture like some electricians do equal the same safety net or does it lose money in comparision to the hourly rate? I would think the billable hours are safer but not always practical. If I had a renovation and you pulled a bid off the plans I would expect you to honor that bid. (excluding changes)


I know the above Q is for the OP, but:

My hourly wage is xx amount. This is what I use to figure the flat fee I charge to the client.This hourly amount has OH+Profit built in. This hourly amount is for my math only; it is not disclosed to the client. So when I calculate my charges to the client:

I figure: 

a. how long the job will take x (my hourly fee)=billable hrs.
b. materials + (handling fee I charge)=total material charges

Add a + b = client's final price

To me, this works great for small jobs. Good Luck.


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## Celtic (May 23, 2007)

Darwin said:


> I know the above Q is for the OP, but:
> 
> My hourly wage is xx amount. This is what I use to figure the flat fee I charge to the client.This hourly amount has OH+Profit built in. This hourly amount is for my math only; it is not disclosed to the client. So when I calculate my charges to the client:
> 
> ...


How do you calculate any of that w/o knowing your billable hours for a given year?


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## mahlere (Aug 6, 2006)

TxElectrician said:


> Mag, I'm taking it that you are planning on being a one man show for awhile. To me 5 hrs/man billable a day is low, my guys get about 6.5 - 7.0
> Alot will depend on what type jobs/ projects/service you plan on doing and how you are able to schedule.
> 
> Also, you are probably basing your 5 hrs a day on a 8 hour workday. You may want to consider a plan C. Be prepared to work 12 or more a day - it will take it to do all the other jobs you will be taking on as a contractor that you didn't have to deal with as an employee.
> ...


you don't want to base your business on overtime...what if you don't have the calls? base it on a conservative #, then if you are working 12 hr days, you are making money doing it....not working 12 hr days to barely pay the bills and out of necessity....

plan for an 8 hr day to run your company (field work and necessary paperwork), then you can put in 4 hrs a day to build your company....


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## mahlere (Aug 6, 2006)

Celtic said:


> How do you calculate any of that w/o knowing your billable hours for a given year?


SWAG...and you let your lifestyle be dictated by your income...rather than dictating the income you need for the lifestyle you want...


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## Darwin (Apr 7, 2009)

Celtic said:


> How do you calculate any of that w/o knowing your billable hours for a given year?


Using the billable hours OP used -similiar to the billable hours I use myself.


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## genecarp (Mar 16, 2008)

I recomend a much less sceintific approach, i am sure many will disagree

1-Charge what you can, your market(location) will determine what your hourly $ can be--i always felt comfortable upper middle pricing.
2-Work as much as you can tolerate

I never was a big proponant of figuring out every expense down to my pencil cost. I just worked hard every day, and charged what the market would bear. G


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## Darwin (Apr 7, 2009)

genecarp said:


> I recomend a much less sceintific approach, i am sure many will disagree
> 
> 1-Charge what you can, your market(location) will determine what your hourly $ can be--i always felt comfortable upper middle pricing.
> 2-Work as much as you can tolerate
> ...


Thank you for that comment. Once you start trying to figure every billable minute into your equation, the picture becomes much more difficult to see...:thumbsup:


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## modterry (Nov 14, 2008)

How does the billable hour work when you have more than 1 crew billable? Example say your overhead is $ 120,000 / year and you use 2,000 hours of work / year that equals: $ 60 / working hour is your OH or run rate.

For this example, assume your OH stays relatively the same up to some level of sales

If you have one direct labor working - you add $ 60 to his hourly rate ?

If you have 3 crew - do you only add $ 20 for OH to each crew for their hourly rate?

I ask this because we do mostly fixed price bidding and I put the OH as a % of the job based upon the $ sale amount as it relates to our yearly OH and not in the labor - because the crew size can vary. I markup the crew cost based upon "a non billable / lost time " like you guys talked about above.

Many thanks for your replies:

Terry


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## mahlere (Aug 6, 2006)

actually, you determine it based on your billable man hours for the year...

I can bet that you are not getting 2000 billable hours per man...probably more like 1600-1700

that being said...your OH is $120,000 total...you have 4 men working...total of 6400 man hours (4x1600)...

so your OH per manhour is $120,000 / 6400 = $18.75/man hour...


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