So you want to be a consultant? – Billable Hours

Recently, I have been getting a number of questions about what it takes to be a consultant. This is obviously a huge topic to try and cover in a single post. The conversation usually turns to a question about how much the person should charge for bill rate. This is not easy to answer either, since several factors come into play. To get started at determining your bill rate you really need to think about how many hours you will be able to bill someone for your services. So how many billable hours are REALLY in a year? Let’s look at the numbers.

52 weeks in a year
x 5 work days each week
260 possible work days each year

Now that we have a starting point, let’s think about time off. Yes, you have to take time off whether you like it or not sometimes. There are essentially 10 major holidays to consider in the United States. While not all companies close on every holiday, you have to plan for them all since you never know what a company will recognize.

New Year’s Day
Martin Luther King Jr. Birthday
President’s Day
Memorial Day
Independence Day
Labor Day
Columbus Day
Veterans Day
Thanksgiving Day
Christmas Day

Next, consider how much vacation time you plan to take each year. This will be different for everyone, but I use 15 days vacation in my planning. That covers sick days and actual vacation time, remember you don’t get paid when you are on vacation as a consultant. Let’s apply our time off to the number of days available and see where we fall.

260 possible work days each year
– 10 holidays
– 15 days vacation
235 possible work days remaining each year

So you might think you can stop here and you could, but I don’t recommend it. Ask any recruiter how many billable hours are in a year and you will probably hear a number around 2000 hours. That number sure sounds great, but this is not a perfect world. You may or may not be on a contract for the duration of the year, consultants experience change and you must be ready. So below I have two scenarios, the first is a scenario where you will have no more than 5 days of not being on a contract and the second is a scenario where you will have 25 days of no work. This may or may not be representative of what you will experience, but better to prepare for the worst.

Good Scenario Bad Scenario

235 possible work days
– 5 no contract days
230 work days
* 8 hours per day
1840 billable hours potential

235 possible work days
– 25 no contract days
205 work days
* 8 hours per day
1680 billable hours potential

So there you have it, plan for both scenarios and you should have a good idea of where to get started with bill rate.