A billable hour is one hour of work a consultant charges to a client. What counts as billable is defined in the contract, whereas non-billable hours refer to internal tasks such as admin or business development.
How do you bill a 9-minute client call? Or the 12 minutes on an email to clarify scope?
Not every billable task fits neatly into a single billable hour, creating a gap. If you're not tracking these small amounts of time accurately and billing accordingly, your take-home pay will be much lower than it should be.
To fix the problem, you first need to get clear on which tasks are billable, decide on your billing increments and then create an accurate time-to-invoice workflow structure.
When you get these three things right, you'll avoid the trap of working for free and undercharging for your services.
What is a billable hour?
A billable hour is the total time a consultant spends on client projects. Time is charged at a preset hourly rate, tracked via time-tracking tools, and converted into invoices.
Billable time usually includes activities such as:
- Onboarding
- Client meetings and calls
- Research and analysis
- Drafting deliverables like reports, designs, briefs, and strategy documents
- Email and messaging
- Travel time to a client
- Project management
On the other hand, non-billable hours for consultants include:
- Admin
- Internal meetings
- Upskilling
- Marketing and sales tasks
These activities support your business operations and aren't related to the scope or deliverables of a client's project.
Keeping track of billable time helps you understand your business's financial health, analyse your productivity, and assess whether you need to raise your rates or create better systems to improve profitability.
Read more: How to Invoice a Client as a Consultant
How do consultants bill for their time?
How you bill your hours as a consultant depends on the work you do and how you want to structure your business.
Here are four ways you can bill your consulting clients:
-
Hourly: Log your time in your preferred billing increments and invoice accordingly. To make sure you're compensated fairly, you need a good understanding of how long a project will take you and how fast you work.
Example: a strategy consultant could bill at $175 per hour. Logging 22 hours in a month would bring in $3,850.
-
Fixed-fee (project rate): For some consultants, it may make more sense to charge a flat fee per project. However, you'll still need to track your hours to know if the project was profitable for your business.
Example: you could quote $4,000 for a project that takes 32 hours to deliver. That would make your hourly rate $125.
-
Retainer: Depending on the project scope, a client might prefer to hire you for an ongoing monthly fee. It's common for advisory work to be capped at a set number of hours.
Example: a consultant could have a $2,500 retainer capped at 15 hours. If you only work 11 hours, you'll still invoice the full amount. If you work overtime, you'll need to have terms in your contract specifying whether the extra time is absorbed or billed separately.
-
Milestone-based: You can bill clients based on an outcome or a deliverable as well. It's a flat fee whether it takes you 20 or 40 hours to complete.
Example: a consultant can bill $6,000 for a completed pricing strategy. If you finish it in 20 hours, your hourly rate doubles, but if the project takes longer than expected, it reduces the amount you're paid for your time.
Good to know: While the billable-hour model applies to the first structure, you still need to know your hourly rate for the other three. It helps you understand your real hourly return and whether your services are priced correctly.
Read more: A Consulting Retainer Agreement Template for the Newly Solo
What billing increment should you use?
Billing in increments as a consultant involves breaking down your hourly time into smaller units. The two common choices are six minutes or fifteen minutes.
The reason?
Most consulting work doesn't fit into a clean, whole-hour chunk. Using increments gives you a standard unit to round time to something you can multiply by the rate.
If you don't use billing increments, you risk:
-
Rounding inconsistently: A 9-minute task might get billed as 0.25 hours or left off an invoice because you don't have a fixed rule to apply. Over time, the lost time adds up and costs you money.
-
Unclear invoices: An invoice that lists 14.5 hours at $2,175 doesn't show clients which work those hours covered. Increments let you itemise time in small chunks, such as 0.3 hours on a call or 0.5 hours on a revision. It saves you from guesstimating and not having a paper trail to justify your rate.
Once you have your hourly rate, you need to decide which increment you want to use. To make the right choice for your consulting business, you need to factor in the following:
-
Touchpoints: If most of your billable work happens in long, continuous blocks (e.g. a half- or full-day workshop), a 15-minute increment doesn't make sense. However, if your work consists of short bursts (e.g. quick calls or brief edits), the increment size matters.
-
Industry: Fifteen-minute increments are the default for most professional services. Using six-minute increments is more unusual, but it's not wrong. It can read as more precise or fussy depending on the client.
-
Line items: If you want to itemise every task on the invoice, smaller increments make the most sense. The client is less likely to push back, and you won't lose money from compounding small chunks of time.
-
Time-tracking and invoices: If you plan to bill in increments, you need to use a time-tracking tool that applies your rounding automatically and pulls it into your invoice as the correct line item. If your workflow isn't set up the way you want to bill, you'll end up with a time-consuming manual process that exposes you to human error.
Stop losing the small stuff
Kiaro applies your rounding rule automatically and drops every entry onto the invoice as a line item — the exact time-to-invoice workflow this section describes. Free, no credit card.
Read more: How to Track Billable Hours as a Consultant (and What Most People Get Wrong)
How many billable hours should you realistically expect to log?
To work out how many billable hours you can sell to clients, you first need to figure out your utilisation rate.
It's the share of your available working time rather than how many hours you worked.
Utilisation rate = (billable hours ÷ available hours) × 100
"Available hours" means the hours you realistically expect to work in a period, after deducting holidays, weekends and time off.
For example, if you're available for 160 hours in a month and you bill 120 of them to clients, your utilisation rate is 75%. Log the same 160 hours of activity, but only 90 of them are client-chargeable, and your rate drops to 56%.
Utilisation is a critical metric for determining how effectively your time is being spent on client work. If you discover your rate is 70%, that's not an immediate red flag. What you need to do is track whether the gap between your available and billed hours is shrinking or growing month to month.
Read more: Hourly Billing Guardrails: Clauses and Change Orders to Prevent Scope Creep
Where does the billable hour model break down?
The billable hour is a great starting point for a new consultant, but there comes a point when it starts to eat into your profitability.
As you become more experienced, you'll start to solve problems faster. It might take you two hours to draft a design, whereas in the past it took six.
Hourly billing caps your upside as you get better at the job and penalises your efficiency by reducing revenue rather than rewarding it. It's why more experienced consultants tend to move towards fixed-fee pricing.
For new solo consultants, billing by the hour helps you learn how long work takes. You need to figure that out before you can price a fixed-fee project, and that only comes from billing enough hourly work to know your real pace.
Track your billable time accurately
A common frustration consultants run into is tracking time with the correct increments and the data flowing seamlessly into an invoice.
Relying on spreadsheets or tools that don't talk to each other generates additional administrative workload that eats into your utilisation rate and bottom line.
To keep your admin stack lean and your workflow as frictionless as possible, look into tools built specifically for consultants. Kiaro is a business operating system for solo consultants and small agencies that ties time tracking with increments into the invoice. Your hours and rate are logged for each line item, providing full transparency into what you're charging to avoid client disputes.
Frequently asked questions
What are the average billable hours for consultants per week?
Consultants typically have a target of around 40 billable hours a week. Actual hours worked may be higher depending on client demand and the scope of work.
What factors influence a consultant's billable hours?
Project intensity, client demands, and work experience all play a role. Strategy consulting tends to demand longer hours, and junior consultants log fewer billable hours as they build their client base.
What tools do consultants use to track billable hours?
Most consultants use a time tracking tool, but which one depends on how many clients you're juggling, your billing structures, and how much you want to spend. The main thing you want to look out for is accurate logging with billing increments and a clean handoff into an invoice.