Ask HN: Hourly billers, do you bill for only focused work?

[EduardoBautista]

I have noticed that trying to bill at higher rates has been becoming more difficult and if I don't work a full 8 hours it appears that I am slacking off. The vast majority of software engineers do not do 8 hours of actual work, even including meetings.

However, I sometimes notice other contractors billing a full 40-hour work week and clients not batting an eye.

Am I being too honest, and should I continue billing for the fifteen minutes I go off reading HN, having lunch, or any other short break?

Edit: I guess what I meant to say, is lowering my rate by around 25%, but also being less picky on what I should bill so that I can earn the same amount, acceptable?

[vitaflo]

I bill by the hour, not the minute. If I work 10 mins on something and do nothing for the other 50, you are billed an hour. Frankly, this is how most clients have actually wanted it. They think in hours (or days) not some subdivision of them. And yes, thinking about work is the same as doing the work. It's all billable time.

As far as your rate, I always bill as high as I can without pushback. Where is that level? You'll know when your rate is too high. I kept increasing my rate with contracts until clients started to grumble a bit. Then I backed it off 10% and haven't had a problem since. Note this means I am getting paid 30% more than where I originally started. Wouldn't have known that if I didn't attempt to max out my rate.

In the end it's just business. You either make a client happy or you don't. As a business your goal is to maximize your profits without much pushback. That will just take some time and energy to find out what the market will bear.

[PragmaticPulp]

> I bill by the hour, not the minute. If I work 10 mins on something and do nothing for the other 50, you are billed an hour.

I deal with a lot of contractors. To be clear: If I asked for a single task that takes 5 minutes and they bill me an hour for it, that's 100% fine in my book. Context switching, recording, billing, etc. aren't free. The difference between a 60-minute bill and a 10-minute bill is nothing. Let's just keep it simple and bill an hour.

But this is only for individual tasks. If someone is working independently on a project with 10 minutes here, 15 minutes there, 5 minutes a few hours later and billing each as an hour, that's not okay.

Depending on the contractor, we don't really scrutinize line items all that closely. However, once you're dealing with multiple contractors and gathering experience about how long things generally take, you start to notice some contractors are outliers in how many "hours" they claim to get things done. In some cases, if their hourly rate is low enough we may not really care, but when someone hits the combo of billing a high hourly rate and also racking up a lot of hours for relatively simple things with no ability to explain why it took longer than everyone else, it's time to phase out that contractor.

[dbg31415]

> In the end it's just business. You either make a client happy or you don't.

Spot on.

1) Do good work. Be patient and kind to clients. Remember when someone asks you to do something for the 8th time, "Hey, it's their money."

2) Make sure you write your contracts in a way that lets you raise rates every January. Aim for a 10% increase every calendar year.

3) Give clients a discount if they sign retainers, or longer contracts. This ultimately means less sales cycle, and more profit for you.

4) Raise rates on clients based on how much you like the work. If you really don't enjoy working with one client, raise their rates until you can stomach the work. If you like a client... yeah cut them some slack.

5) Always know who your stakeholders are at a company, and make sure you send some nice thank you gifts this time of year. Even if it's just a card saying why you appreciate certain people on their team... letting those people know, and letting their bosses know... that buys you a lot of goodwill. 'Tis the season. (=

[muzani]

Yeah, this works for me. One option I did early on was run a Pomodoro timer and bill every half hour, but a client brought up that I should also be charging for the hours I spend in traffic on the way to a meeting.

My wife once asked why I bill $115/hour and not a round number like $120 or $100? How did I get the 5? I just kept raising rates to say no to jobs I didn't feel like doing, and found a point where I got the jobs I wanted.

[arikr]

Seems surprising to me. Rounding to 15 minutes, sure, but 60 seems surprising. Can more people chime in?

[halpmeh]

> I bill by the hour, not the minute. If I work 10 mins on something and do nothing for the other 50, you are billed an hour. Frankly, this is how most clients have actually wanted it.

I find it hard to believe anyone wants to over pay for your time by 6x what it's worth. I understand rounding up. But I don't understand working 10 minutes one day, billing for an hour, and then working 10 minutes the next day and billing for two hours total.

[pm]

Do yourself a favour, and bill by the day, rather than by the hour. Engineering is creative work, and you're paid to think - code is just the end product. Thinking happens consciously and unconsciously, at all times of the day. Billing by the day will allow you to focus on the work rather than the administrivia.

Whatever you do, do not drop your rate: you'll just be undervalued by your clients.

[lawn]

Indeed.

Many of my best ideas have come to me in the shower, on a walk and even in the middle of the night.

It's ridiculous to say you should have a stopwatch with you at all times, so daily billing it is.

If they don't want to that, just assign 8 hours as a full day and stop worrying of you reach them or not.

[newbYhrly]

Yes, this. If I think it will take 2 days, I say 3 and hand off on day 3. Numbers are just examples.

I get half up front, half on delivery.

Trying to juggle a set of rules for when to run the clock is a distraction.

[CyanBird]

Yap, this is the correct way of doing it

That and Value based pricing

https://youtu.be/ivKnj9ffcmE

[zerr]

The issue with daily rates is that the client assumes you are available/working for a "full" magical 8 hours. On my side, I don't want to bill for a "full" day if I did some quick 1-2 hours of work. I also don't want to do such 1-2 hours of work for free.

[diob]

Yes, and if possible by more than a day.

[pwdisswordfish9]

Billing by the day is good advice, but

> Engineering is creative work, and you're paid to think - code is just the end product.

No you aren't. No one cares if you think. They care about what thinking is (supposed to be) getting them. It just so happens, though, that whatever that is requires thinking. So you do charge for that. But no one is paying you "to think".

[mrkeen]

I've been in the same boat. My resentment just built up over years, and for what? It just made me seem like an uptight arsehole. And I probably was too. Looking like I'm working used to be a (minor) concern of mine, but I'm more focused if it doesn't enter my mind.

Charge for your time. Don't stop the clock for meetings, short breaks, toilet etc. Lunch is debatable. If you go for a short lunch, with your work colleagues, then I'd probably bill. If you like to get out and clear your head and go and hermit somewhere for a full hour, I'd say probably not.

If there are weekly perk-style activities that happen in-hours (Table-tennis, multiplayer games, etc.,) bill them. Otherwise your boss is just making you stay in the office playing vidya for free when you could be going home to your kids. If an after-work activity starts early, e.g. drinks at 4:30 followed by a team dinner at 6:30, I'd probably bill up until when I would have usually worked until (so 5:00 or 5:30).

One time I went and got coffee with some of my teammates in the cafeteria, and we sat around for a while and chatted. Later I was quietly praised by my manager for making that happen. Because his job was to make sure we could actually get along and produce work together.

[john-radio]

> Looking like I'm working used to be a (minor) concern of mine, but I'm more focused if it doesn't enter my mind.

You can stop an intrusive thought from entering your mind just by realizing that it would harm your focus? Is it possible to learn this power?

[rr888]

A lawyer died and arrived at the pearly gates. To his dismay, there were thousands of people ahead of him in line to see St. Peter. To his surprise, St. Peter left his desk at the gate and came down the long line to where the laywer was, and greeted him warmly. Then St. Peter and one of his assistants took the lawyer by the hands and guided him up to the front of the line, and into a comfortable chair by his desk. The lawyer said, “I don’t mind all this attention, but what makes me so special?”

St. Peter replied, “Well, I’ve added up all the hours for which you billed your clients, and by my calculation you must be about 193 years old!

[milesvp]

On the topic of lawyers, a good friend is a solo practice lawyer. She says the general rule as a solo lawyer is that you generally can’t bill more than 20 hours of a 40hr week. The rest of the work time is marketing and business related. But that also means they need to charge enough to make those billable hours worth it. That said, there’s also currently a big push in her specialty to move to fixed billing to avoid many of the problems of billable hours.

[shiftpgdn]

From John Grisham's "The Firm" :

Avery taught Mitch all about billing clients for his time. As an associate he could bill $100 an hour. His future progress at the firm, he was warned, depended on how much income he made for the firm. He learned that it was acceptable to bill clients more than he actually worked. 'If you think about a client while you're driving over to the office in the morning,' Avery told him, 'add on another hour.' He could bill clients for twelve hours a day, even if he never worked twelve hours a day. Mitch also learned that Avery liked to bend the firm's rules.

[biztos]

First, I'd point out that there is a lot more acceptance now for "day rate" or "week rate." You can find its advocates in most contracting-related threads here on HN. If you are paid by the day, it doesn't matter if that's a 10-hour day or a 4-hour day as long as the client doesn't feel taken advantage of.

Nor should you be taken advantage of: I have friends in other industries where "day rate" is the standard, and it's a high rate but it sure does involve crazy hours when the project is in full swing. Ask a film editor about "work hours" and they will either laugh, or cry. Let's not normalize the 18-hour day!

Second, you should feel good about even worrying about this: it means you've got some ethics. But you shouldn't feel like you owe "flow state" for every hour you bill. Do you need to take a walk to clear your head and better concentrate on the problem? That's work. Lunch isn't that much harder: is it a working lunch? Bill it. Are you having a nice long lunch in order to not think about work, or maybe meeting friends? Don't bill it. (Day/etc. Rate obviates this problem.)

Third, socializing with the staff is a little complicated if you're billing hourly, or sometimes even daily. I would be pretty happy if a contractor went out for social food/drinks with my employees, but I would much prefer to pay for that in good will than in actual billed hours. On the other hand, if you're at one of those places with ping-pong tables and the SRE peeps really want you to play with them: bill it!

[katla]

This is a question I’ve struggled with a lot myself. From my 15 years of experience as a contractor:

1. Never lower your rate, bringing it back up will be way harder then you might think.

2. Breaks etc. are billable. I even bill for walks that may be a long an hour, as long as I think about work. If I stop doing that I stop the clock too. Like others said, code is just the end result. I will usually produce better if I take a breather. Thinking things through will almost always let you find ways to write less code, resulting in a more stable and maintainable solution. Nothing suggests you think better while seated infront of your screen.

3. Always round up to the next hour.

[DubiousPusher]

I am required to bill in 15 minute increments for public sector work and 1 hour increments for private sector work. I don't bill for time I am actively concertedly doing something else. But if I am so much as reading a research paper that touches tangentially on their work, I bill them for that.

When my client roster is heavy, I bill about 32-36 hours a week. The other 4-8 hours is mentor, team building, personal development, networking, etc.

I only bill 40 hours when I'm overbooked or I have a big dedicated project and I can drop a lot of the other activities because I don't need to be branching out and maintaining awareness so much of various projects.

I have colleagues who bill 40 hours almost every week. I believe most of these people are being honest and they're working nmore hours and pushing their non-project work into their personal lives/time. I'm pretty strict about containing my work schedule so I bill less. It has never been a problem at my work.

[ushercakes]

IMO, when billing hourly, it should only be focused work. They aren't paying for you to go on lunch, etc. That's for salaried workers. I'm not saying don't go on lunch, I'm just saying you can't charge for that in good faith.

In a single day, you should target 5/6 hours of billable work. The extra 2-3 hours are for lunch, and other management type work you need to do to keep your freelance business afloat.

Btw, not to be a broken record, but you should try charging either by the day or by the project. It's just more security and takes the pressure off of needing to justify every individual hour spent.

Another tidbit of advice: use https://contractrates.fyi to figure out what you should be charging by the hour. A solid chance that you are undercharging.

[justanother]

I agree with all of this. I round up to the nearest 15-minute increment on hourly gigs, and I stay 'clocked in' except for lunch, cardio, siesta, and other unrelated activity. Even so, 6 hours is a very full day (sometimes even involves a bit of after-dinner work depending on the day), and people billing hourly like this would likely do well to consider that when setting their rate.

Day rates and retainers are much nicer in this regard, and should be used whenever possible.

[karaterobot]

In my experience you bill what you can get away with billing while making the client happy. That may mean billing when you're not working, but it can also mean working without billing at all. The idea of time-based billing is pretty fuzzy when you get into the details, so it's better when nobody on either side tries to figure it out, and you just ship something that makes them happy.

In terms of negotiating a rate that makes you competitive, your idea could work, yes. The danger is that (IME) clients who were that budget conscious were also generally worse clients in general: less organized, less of a vision, less willing to do things like pay for user testing and support, generally more stressful to work with. Often their projects were less interesting, too.

At a certain point, my company just raised everybody's rates significantly, across the board, and rather than going out of business, we ended up getting better projects as a result. In that case, I was shocked to realize that software contracting can act like a Veblen good, though in an economic climate like this one, I'm not sure it would work that way.

[skydhash]

Hourly billing burnt me out. I started on Upwork with the spying software installed. I was desperate for money at that time. But my own methodology when working is to think about the problem, only typing code when I have a good hint about a solution. So for a day of work, I may spend one hour typing code, three hours reading code and the rest of the time thinking hard. But the activity monitor inside the software only picked up the time when you're actively using the computer so, I was always distracted in my thinking with the reminder that I have to use the mouse for the timer to resume.

Now I'm paid a fixed price each month (fairly high for where I'm living). So, wages are not something I think about. But when I try to negotiate other project, I either go fixed, or billed by the day at the smallest. My usual hours for work range from 10am to 5pm, so I bill this amount if the client really wants hourly invoicing.

[blurbleblurble]

The thought of going back to upwork gives me nightmares.

[pclmulqdq]

Upwork absolutely sucks. Never again.

[anonymous_goat]

I bill everything, that I do for a client, on the clients premises, or that I feel like it's work - specifically if the client asks me to attend something. I draw the line when it's my benefit only (e.g. going out with the coworkers for a beer after hours). But beside that: If I don't get a problem I was working on out of my head and research it for 2h at 3 in the morning, I bill it.

I do not sign any contracts, which automatically cut my workday to 8h (because they are illegal in my jurisdiction). If I work more than 8h, I sometimes get into trouble with some tight-assed legal department and I then just shift my hours on the timesheet around, until it fits.

You should not under any circumstances reduce your rate, if you feel like the rate reflects your skill. Instead, explain your rate with your achievements, references, etc. and negotiate the gain/speed/performance your client is getting by hiring you with your higher rate instead of a competitor.

I recommend against daily rates if you are able to zone into work and get serious shit done in 12h-shifts, while other days are just "eh" and you go for a jog after 4h. Usually, everyone notices your 4h-days while ignoring your 12h-days.

If you trust your skills and your ability to define the scope of a project well, consider going into milestone-based payment (never for a whole project!). This might be more lucrative for you in the long run.

If you choose this, think about a timespan you're willing to work without payment and half that timespan - that's the number of days between milestones you'll define. Should you hit a bad client, you'll stop working if payment hasn't gone through for the past milestone for whatever reason and when you're reaching the second milestone - never accept apologies, process delays, "those pesky policies"; you work for payment, everything else is the clients' problem, not yours.

[conductr]

> I guess what I meant to say, is lowering my rate by around 25%, but also being less picky on what I should bill before so that I can earn the same amount, acceptable?

Yes, it's fine, you should pad one of them. Either rate or time. Even if you just log in to a 1 hour meeting they host, bill them for 1.25-1.50 hours for context switching/ "prep work" is pretty acceptable. It is going to be client specific, if you find your clients are being overly sensitive to either - you probably want to find another client as it's just going to be a rough relationship when they're counting every minute/dime. Of course, the best practice is to put all of this in a contract but there's a million edge cases. Some general clause may work.

[Justsignedup]

Well, typically people like to see billing for hours used... so...

If you work today: 8 hours billed.

If you work part of the day: part hours billed

If you work overtime: 8 hours + OT hours.

I agree with conductr that this is creative work. If you talk to someone to gather requirements, do meetings, help teammates out, etc, it is all part of the process. If you need to look up stuff that is part of the process.

Just like any engineer, you can't be "on" 24/7 so it is expected that some slack time is cooked into your hours. If your productivity doesn't make sense compared to the hours put in, that's the problem. If you're producing more than enough for your hours, where's the problem?

Anyone nickle-and-diming you on checking that every 15 minutes is accurate is going to be a bad person to work for anyways, or just needs to negotiate less hours.

[leros]

From what I hear, more experienced contractors will often inflate their hours instead of charging more per hour.

Apparently people will happily pay $100/hr for 3 hours of work, but not $300/hr for 1 of work from a more experienced person.

[orthecreedence]

Any time or energy you could be devoting to something else that you spend on the client is billable. This includes thinking about the project while you're on the toilet. As others have said, billing in bigger increments (rounded up) might help you morally absorb more of this "idle" time.

> is lowering my rate by around 25%, but also being less picky on what I should bill so that I can earn the same amount, acceptable?

Sure, why not? But I wouldn't do this with existing clients because you're basically telling them your time is worth less than it was before.

[neilv]

I'm curious for HN's ideas on doing this with WFH, for fine-grain billable time, since I wasn't entirely happy with how I did it, as an independent consultant.

On-site billing was much easier and more lucrative than WFH -- just bill any time on-site, except for lunch breaks.

When WFH, I was very serious about billing focused work only. Work included lots of heavy coding, heavy architecture, advising, and the occasional quick technical question. I logged time in 15-minute increments (at least not 6-minute), and only when I was in front of the workstation and actively ready to start working (but if I got up to pace while thinking about the work, and then went back to type, all that was billable). At one point, I even had client-dedicated laptops and email accounts, for focus and for data handling.

I'd also (unless sometimes in a rare marathon or very urgent situation) be all awake and alert, showered, dressed in biz casual Dockers, etc., before I started the clock.

One time, an exec at a client said something like "if you go for a walk to think about an algorithm, you should bill it", but that seemed too fuzzy or slippery-slope for me.

With my favorite client, I got WFH flexibility (before that was commonplace), further developed skills all over the stack and lifecycle, and made key contributions to very important projects/programs that I'm proud to have been a part of.

However, TC was a small fraction of what it would've been performing similarly at Google. So today I still have to hustle, long after doing similar work at a dotcom would've let me "retire" (i.e., do angel investment, while self-funding my own work in whatever catches my interest, or fundraise for a startup when I don't personally need the money). Being a little less stringent with the WFH clock would've helped, though I don't know where to draw the line.

(When non-consulting employed and WFH, I just make sure I put in a solid day. It's often, say, 8 "billable" hours spread across 12 clock hours, not counting meals, errands, chores, exercise, HN breaks, etc.)

[kqr]

When I've charged for consulting work the smallest unit I've allocated to a client is half a day. That means I work for one client before lunch, and potentially another after, both get charged 4 hours (or 3 hours when I did 6 hour days).

If I finish my assigned task within 10 minutes, then I find something else to do for that client to fill up the rest of the time. It usually leads to them being pleasantly surprised at me taking lead on improvements, and gives me a chance to refactor things that are difficult to maintain.

[ilaksh]

I think it depends on the circumstances what you should do. Such as whether the client has a real budget. Honestly for me it is relatively trivial to find clients with shoestring budgets versus adequate ones.

But ideally you set things up ahead of time by finding a client with a decent sized budget and then charging by the week. The billing increment is one week.

Then just make sure to have regular delivery or discussions as often as possible with the client. They should see the deliverables progressing, even if it's just the architectural details being worked out at first. They should be judging based on useful things obviously happening and being explained or being able to use the next version rather than just looking at hours to try to guess whether they are getting a good deal or something.

For me, we will see how it goes. Right now I have a weekly billing client who I am a bit worried I will have to replace because things in this niche are so dead right now. But there were a few other projects I may be able to pick up. I am definitely going to try to find one that can afford a week or two though because realistically all of the projects have gone on for more than two weeks so far, generally speaking more like 2-8 weeks each.

When it's going to almost certainly take a month to complete a project, trying to get out of an extra hour every day or something is a questionable strategy because it's a significant investment anyway, and the biggest risk really is most projects just not delivering usable software at all, which means all of that money gets wasted.

[stevage]

Ultimately the only thing that really matters is whether the client feels good when they pay your invoice. Charge twice as much for half as many hours, or the reverse, it doesn't really matter. Deliver results at a cost they are ok with.

The tricky part is how to bill when you have expended effort and time but there are no results to show for some reason.

[happyjack]

My 2 cents as someone who billed engineering work (not software) for 5 years (again, my experience and it is totally industry dependent!)

For every two hours of billed work, there's an hour of non billable work. There's admin, billing, reporting, business development, etc. that comes with being a contractor ... and that's if you're efficient!

Do you only have one project / client at a time? If so, bill 40 hours and don't bat an eye. Bill at the highest rate you can. My guess is this is the salary at a comparable position divided by 2000 hours ($100k per year is $50 per hour) and add 30% to it or whatever your overhead rate is. If you're talking lawyer rates (~$400 an hour) then yea, you need to bill in small increments and hire out your admin / other stuff to a staff.

Once you dedicate over half of your working hours to a single client / project the rate becomes a comparable employee plus 30%.

[inphovore]

I see by the comments that a lot of intelligent people do not understand billing ethics.

There are many layers of relationship, and your relationship will truly define the nuances of your billing process.

However regarding your question, there are a few considerations which determine when you are being “flexible” and when billing becomes corrupt (if you are not objectively providing value you are stealing.)

Are you in the office? On call? Devoting exclusive attention? Or otherwise billing for full days (with hours as increments?) If you’re in the office or real time “available” then it’s a billable hour even if you check HN or eat at your desk or wander around wondering what everyone else is up to (some call it insight.)

If you’re really billing hourly and your not working, you shouldn’t bill for those hours you are not working (like playing hooky.)

Fifteen minute increments are the floor for technical work (more common once you’re over $100/hr)

It’s okay to round up (or down) one total hour if you do not want to split hairs on an invoice (sic. 45 minutes of hand holding.) put a foot note on the invoice (total hours round up) if you want to be transparent.

You should be billing for all one off tasks. Talking about the project. Doodling about the project in your notes. Fastidiously rolling up and double checking your work/time spent. Email. Chat. Learning something new that evaluates into what you are doing can often be included (if not abused.)

I usually budget in 25% of project hours for one off tasks.

If you have a full time relationship (40 actual hours), you should fill the time with something, even if doodling in your journal about observations.

Hourly is a great way to build if your a “lone ranger” contractor.

Usually I like to only bill 15 hours a week! True liberation.

You shouldn’t lower your rate (unless you must.) Work fewer hours! That’s the real dream. Independent and gainful.

[watt]

Here's a thought exercise I would like to put to test sometime. Let's say I would like to make USD 200 000 a year as a contracted sotware engineer. And I would like to try billing 10 hours a week. Take 6 weeks off a year, so this is 46 weeks. And that's 460 hours I will try to bill. To make 200 000, I must bill USD 435 per that hour.

The deal would be: I bill you for 10 hours, and you can be sure I worked hard for those 10 hours. I probably worked 40 hours, but I bill you 10. But that's the going rate.