Above, in order to meet expenses, grow the business, and take time off, I would need to bill $94.20 per hour in order to sustain a consulting business. Once you have your hours and the total amount you must bill, divide the two. Live in a nation where there are minimum requirements for time off? Add that in. Want to take more? Remove more billable hours. In the example above, I removed 80 hours of billable time, or two weeks’ vacation. If you want to take time off – and you should – that must be budgeted as well. In the example above, that $62,800 in necessary income is $188,400 in what you must bill in total for the year.ĭon’t forget things like time off. The other 67% of your time will be spent building your business, marketing yourself, speaking, etc. If you’ve ever done business with an agency, the average billing rate is 3x the salary of the person doing the work that 3x multiple translates into 33% billable time. The reality is that consultants are lucky to get 50% utilization. They assume 100% utilization, meaning every hour they’re clocked into work, they’re doing billable work. Now here’s the part almost every consultant does wrong. Before anything else, the total income I’d need in this example is $62,800. Using the calculator above, I set a tax bracket of 25% for federal, 7% for state, and a healthcare cost estimated at 25% of all expenses. (choose File > Make A Copy in the Google Sheets interface)
Consulting billiable hours spreadsheet free#
If you’d like to make a copy, feel free to use this link to copy this Google Sheet for yourself. As a consultant, there’s a good chance you will be a 1099 consultant as well, so you’ll need to budget between 30-50% extra for health insurance, self-employment tax, etc.įor example, let’s say you have $40,000 in actual expenses for the year, including rent, food, etc. First, you need to know what your mandatory annual income is, the money you must earn in order to be able to survive and reasonably thrive. This is the rate you must charge in order for you to justify your time and the project you’re working on and is typically expressed in an hourly rate.
Consulting billiable hours spreadsheet how to#
Here’s how to judge your minimum consulting billing rate. So, now that you know what your current billing rate is, let’s see where it fits in the grand scheme of things. If you can identify more of the work that pays crazy good, then you can focus your marketing efforts on attracting more of that kind of work. Knowing what makes one customer pay 10x more than another customer is vitally important, because it helps you understand some of your value. If we don’t know, then this would be a good time to find out. So the question is… why? What was so different about these clients or projects in the toy example above that justified such huge variations in what you were charging per hour? That’s a literal 10x discrepancy from minimum to maximum. What we see above are some wild variations in our billing example, from a minimum of $333 per hour to a maximum of $3,400 per hour. Log what you earned for each project, and log the hours you invested: Let’s say you’ve got a handful of recent projects. doesn’t matter we just need to get to an understanding of what our rate is. Whether you do projects, hourly billing, etc. So, our first step should be to understand what our rates are. We typically express billing rates or effective billing rates in currency per hour of time. But before we get into that, we have to answer a critical existing question. There are two methods for assessing your fair consultant billing rate, and both are important, the floor and the ceiling. I have had a few people ask for my help and I just am not sure where to start.” “Was wondering how you work your consulting business? Is it per project? Per month? etc. I was asked recently on Facebook about consulting billing rates:
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