Billable Hours
Definition
Billable hours are the portion of a technician's paid time that is actually invoiced to customers as productive service work.
What Billable Hours Means for Your Business
What it means
A tech's day includes drive time, shop time, breaks, training, and the hours actually spent doing revenue-generating work for a customer. Only the last category counts as billable.
Why it matters
Billable hours are the raw material of field service revenue. Two techs on identical pay can generate wildly different revenue based on billable hours alone. This metric drives pricing, capacity planning, and tech-level performance.
How contractors use it
Payroll captures total paid hours. Work orders capture billable hours. The ratio becomes technician utilization rate. Managers drive billable hours up by cutting drive time, shop visits, and idle time.
Real-World Example
A plumbing shop ran techs at 24 billable hours out of a 40-hour week, 60% utilization. Lifting billable hours to 30 per week per tech, across 8 techs, added 2,496 billable hours per year at $125 each, or $312,000.
Related Terms
Technician Utilization Rate
Technician utilization rate is the percentage of a tech's paid hours that are actually billed to customers as productive work.
Non-Billable Time
Non-billable time is any hour a technician is paid for but is not invoiced to a customer, including drive time, shop time, training, and idle time.
Effective Hourly Rate
Effective hourly rate is total billed revenue divided by total paid hours, revealing what each tech is actually earning the business per clock hour.
Burdened Labor Rate
Burdened labor rate is a technician's true hourly cost after adding payroll taxes, benefits, and other employment overhead on top of base wages.
Technician Revenue
Technician revenue is the total dollar amount of work that an individual field technician has billed over a given time period.
Put This Into Practice with Free Software
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