Billable hours

Billable hours are the unit of revenue in time-and-materials work. The client pays for hours, the professional tracks hours, the invoice lists hours per task or per period multiplied by the agreed rate. The distinction between billable and non-billable matters because not every hour worked goes on a client invoice: time spent in internal team meetings, training, business development, or fixing a problem the client should not be paying for is absorbed by the firm.

Rounding conventions vary by industry. Legal and accounting firms historically round to 6-minute increments (one-tenth of an hour). Software consultancies often round to 15-minute or 30-minute blocks. Design and creative work sometimes rounds to the hour. Whichever convention you use, state it in the engagement letter and apply it consistently; mid-engagement rounding changes are how disputes start.

Block-billing ("4 hours: design work") is increasingly out of favour with sophisticated clients, who want line-item visibility into what each chunk of time covered. Itemised hours ("45 minutes: client kickoff call; 2 hours: initial wireframes; 1 hour 15 minutes: revisions per feedback") take more discipline to track but produce invoices that survive AP scrutiny without questions.