Billable hours versus paid hours
A technician is paid for every hour at work, but only some of those hours can be charged to a customer. Driving between jobs, loading the truck, paperwork, training, waiting for parts and slow days are paid but not billed. Billable hours are what is left.
How to work it out
Billable ratio = billable hours ÷ paid hours
Example
Illustrative numbers only. A technician is paid for 2,000 hours a year at a fully-loaded cost of $39 an hour, which is $78,000. Only 1,300 of those hours are billable, a ratio of 65%. The true cost of one billable hour is $78,000 ÷ 1,300 = $60, not $39.
Why it matters
Your hourly rate has to cover the cost of a billable hour, plus overhead and profit. Pricing from the paid-hour cost is the most common reason a business that looks busy still loses money. Raising the billable ratio, through better scheduling and routing, lowers the cost of every billable hour without changing a single price. The same idea measured as a performance number is technician utilization.
Related
- Technician true cost calculator
- Billable hourly rate calculator
- Labor burden
- Scheduling and dispatch best practices
Definitions here are general and educational. Exact meanings can vary by trade, region, and software.