How do I set my hourly rate?

Calculate your desired annual income, divide by billable hours (typically 1,500-1,800/year), and add a buffer for overhead, taxes, and non-billable time.

Should I track time in 15 or 30 minute increments?

15-minute increments are standard for most industries. 6-minute increments (0.1 hour) are common in legal billing. Communicate your increment to clients upfront.

How detailed should time entries be?

Include the date, hours, and a brief description of work performed. Enough detail that the client understands what was done without reading a novel.

Can I set a monthly hour cap?

Yes. Agree on a maximum monthly hours with the client. If you approach the cap, notify them and get approval before continuing. This prevents billing surprises.

How do I handle travel time billing?

Specify travel time billing in your agreement. Common approaches: bill at 50% of your standard rate, include travel in the hourly total, or bill travel as a flat fee.

Recurring Billing: Time-Based Billing

Time-based billing charges clients based on the actual hours or time spent on their work. Each billing period, the total hours are tallied and invoiced at the agreed hourly or daily rate.

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How Time-Based Billing Works

Track time spent on each client's work throughout the billing period. At the end of the period (typically monthly), generate an invoice showing the hours worked, the rate, and the total charge. Time entries may include descriptions of work performed.

Who Uses Time-Based Billing?

Law firms and legal professionals

Freelance developers and designers

Consulting firms billing by the hour

Accounting and bookkeeping services

Virtual assistants and support professionals

Pros & Cons of Time-Based Billing

Advantages

+ Direct correlation between effort and payment — you are paid for every hour
+ Flexible for variable-scope work where scope cannot be fixed upfront
+ Transparent — clients see exactly what they are paying for
+ No risk of losing money on underestimated projects

Considerations

- Revenue is limited by available hours
- Clients may question time entries or dispute hours
- Penalizes efficiency — faster work means less revenue
- Requires disciplined time tracking throughout the engagement

Example Time-Based Billing Invoice

Here is what a time-based billing recurring invoice typically looks like.

Item	Description	Amount
Development Work (42 hrs)	Feature implementation, code review, bug fixes — detailed log attached	$6,300.00
Project Management (8 hrs)	Sprint planning, client calls, documentation at $125/hr	$1,000.00
Expedited Delivery Premium	1.5x rate for after-hours work on critical deadline	$675.00

Time-Based Billing Best Practices

Track time daily — retrospective time tracking is inaccurate and leads to lost billable hours.

Include brief descriptions of work performed for each time entry on the invoice.

Set minimum billing increments (15 or 30 minutes) and communicate this to clients.

Invoice monthly to keep billing current and prevent large, delayed invoices that shock clients.

Offer rate tiers for different types of work (e.g., senior rate vs junior rate, standard vs rush).

Provide a time estimate upfront so clients have budget expectations, even for hourly work.

Common Time-Based Billing Mistakes to Avoid

Not tracking time consistently, resulting in unbilled hours (revenue leakage).

Submitting invoices with vague time entries like "worked on project" — clients want specifics.

Billing in large blocks (8+ hours) without breakdown, which invites client scrutiny.

Not communicating rate changes in advance of the next billing cycle.

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Time-Based Billing FAQ

: Calculate your desired annual income, divide by billable hours (typically 1,500-1,800/year), and add a buffer for overhead, taxes, and non-billable time.
: 15-minute increments are standard for most industries. 6-minute increments (0.1 hour) are common in legal billing. Communicate your increment to clients upfront.
: Include the date, hours, and a brief description of work performed. Enough detail that the client understands what was done without reading a novel.
: Yes. Agree on a maximum monthly hours with the client. If you approach the cap, notify them and get approval before continuing. This prevents billing surprises.
: Specify travel time billing in your agreement. Common approaches: bill at 50% of your standard rate, include travel in the hourly total, or bill travel as a flat fee.

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