The Billable Hours formula (with reality baked in)

Most “billable hours calculators” do one thing: Goal ÷ Rate = Hours. That’s not wrong — it’s just incomplete. In real life, you don’t bill every hour you work. You take time off. You have admin. You have sales. You get client delays. So this planner adds three practical ideas: utilization (billable % of your working time), time off (weeks off per year), and a buffer (extra hours to absorb cancellations and unbilled gaps).

You can set your goal as monthly, weekly, or annual. Under the hood, we convert everything into a weekly number because weekly planning is where execution happens. We use a simple 52‑week year and then account for weeks off:

• Work weeks per year = 52 − weeks off
• If your goal is annual, then weekly revenue target = annual goal ÷ work weeks
• If your goal is monthly, we approximate annual goal = monthly goal × 12, then divide by work weeks
• If your goal is weekly, weekly revenue target = weekly goal (then we still apply buffer later)

Why convert monthly to annual first? Because weeks off matter. If you take 8 weeks off, your monthly “target” has to be earned inside fewer working weeks. Converting monthly to annual and dividing by work weeks keeps the math honest.

Once we have a weekly revenue target, raw billable hours are:

• Raw billable hours/week = weekly revenue target ÷ hourly rate

This is the classic equation. If your weekly revenue target is $2,000 and you charge $100/hr, you need 20 billable hours. But “need” is not the same as “plan.” That’s where buffer comes in.

Buffer is a percentage that increases your billable target to absorb things that reduce billed output: client reschedules, partial weeks, ramp‑up time, small unbilled favors, and the occasional “I’ll just fix that quickly.” The buffer calculation is:

• Planned billable hours/week = raw billable hours/week × (1 + buffer %)

If you need 20 hours and you use a 10% buffer, your planned target becomes 22 billable hours/week. That extra 2 hours is your “shock absorber.” Without it, you can be doing great work and still miss your income goal.

Utilization is the fraction of your working time that becomes billable. If utilization is 65%, then only 0.65 of your time produces billable hours. The conversion is:

• Total work hours/week = planned billable hours/week ÷ utilization
• Non‑billable hours/week = total work hours/week − planned billable hours/week

This is the moment most people have an “oh” reaction. A 25‑billable‑hour plan at 60% utilization implies about 41.7 total work hours/week. You’re not “lazy” — you’re seeing the true cost of running a business: sales, admin, context switching, revisions, operations, bookkeeping, and sometimes just waiting.

The planner divides weekly billable hours by working days per week to create a daily target. Then it compares that number to your “max focused hours/day” (your cap). This cap exists for a reason: many people can do 4–6 high‑quality hours/day consistently, but 8–10 “focused billable hours” usually collapses quality or health.

• Billable hours/day = planned billable hours/week ÷ work days/week
• Total work hours/day = total work hours/week ÷ work days/week
• Capacity check: if billable hours/day > cap, the plan is “risky”

Let’s say your goal is $8,000/month, your rate is $125/hr, utilization is 65%, weeks off is 4, work days is 5, buffer is 10%. First, annual goal ≈ $96,000. Work weeks = 48. Weekly revenue target = 96,000 ÷ 48 = $2,000. Raw hours = 2,000 ÷ 125 = 16 hours/week. Planned (with buffer) = 16 × 1.10 = 17.6 hours/week. Total work hours = 17.6 ÷ 0.65 ≈ 27.1 hours/week. Daily billables = 3.5 hours/day. That’s very doable, and it leaves plenty of room for pipeline and admin without needing a 50‑hour week.

Goal $12,000/month, rate $60/hr, utilization 55%, weeks off 6, work days 5, buffer 20%. Annual goal = 144,000. Work weeks = 46. Weekly revenue target ≈ 3,130. Raw hours = 3,130 ÷ 60 ≈ 52.2. Planned = 62.6 billable hours/week. Total work hours = 62.6 ÷ 0.55 ≈ 113.8 work hours/week. That’s not a plan — that’s a warning sign. The solution is not “discipline.” It’s changing the model: raise your rate, shift to retainers, productize, narrow scope, or reduce the goal (temporarily) while you rebuild pricing and positioning.

A risky plan typically happens when one variable is out of alignment. Here’s a simple order of operations:

• Raise rate (most leverage). Even a 20% rate increase can drop required hours dramatically.
• Increase utilization by reducing meetings, batching admin, and using retainers with clear scope.
• Reduce buffer only if you’re truly stable (but keep some).
• Change delivery model (productized services, fixed scope, templates, async).
• Adjust goal short‑term while you rebuild pricing/pipeline.

The viral truth: Most freelancers don’t need to work more. They need a plan that reflects utilization and time off. This calculator is designed to show that clearly, in numbers, before you commit your calendar.

Frequently Asked Questions

• What does “utilization” mean?

  Utilization is the percentage of your working time that becomes billable. If you work 40 hours/week and bill 24, your utilization is 60%. The rest is still work: sales, admin, context switching, delivery overhead, and support.

• Why do you ask for weeks off per year?

  Because time off changes the math. If you want $100k/year but only work 46 weeks, your weekly target is higher than if you work 50 weeks. Planning with time off prevents “I took a vacation and now I’m behind” stress.

• What’s a realistic utilization percentage?

  Many solo consultants land in the 50–70% range. With tight scope, async delivery, and retainers, 70–80% can happen. If you’re doing lots of sales, proposals, or custom one‑off projects, utilization may drop below 50%.

• How do I choose a buffer?

  If your work is stable and retainer‑heavy, 10–15% is often enough. If you’re project‑based, new, or rebuilding, use 15–25% so you don’t miss your target when clients stall.

• Does this include taxes and expenses?

  Not directly. This planner targets revenue. If you want a take‑home goal, increase the income goal to include taxes, fees, and business expenses — or use related tools like Cash Flow and Profit Margin calculators.

• My plan is risky. What’s the fastest fix?

  Usually rate. Try increasing hourly rate until billable hours/day fits your cap. If that rate feels high, that’s a positioning and offer design problem — not a math problem. Productize and narrow scope to justify the rate.

• Can I use this for a retainer?

  Yes. Convert the retainer to an implied hourly rate (retainer ÷ expected hours) or use your blended rate, then see if the required billables fit your week.

• What if I work 4 days/week?

  Set “working days” to 4. The planner will raise the daily target accordingly. If it becomes risky, consider raising rate or reducing scope to protect your schedule.

• Is this accurate?

  It’s as accurate as your inputs. The goal is not a perfect prediction — it’s a clear plan with conservative assumptions. Re-run it quarterly as your pipeline and delivery model evolve.

The “billable hours reality check” people share

This calculator tends to get shared because it creates a surprising insight: your income goal quietly implies a weekly schedule. When you share your result, it’s not just a number — it’s a conversation starter about pricing, boundaries, and the real cost of admin and sales time.

• Try extreme inputs (low rate vs high rate) to see the workload difference.
• Set utilization honestly (most people overestimate it).
• Save two snapshots: your “current reality” and your “ideal next quarter”.