# What Are Billable Hours?

Billable hours are the hours of work you can actually charge a customer for, as opposed to all the hours you pay for. In field service, drive time, shop time, training, callbacks and paid time off are paid but not billed. Your hourly rate = (labor cost + overhead + profit) ÷ billable hours, not paid hours.

## Key takeaways

- A full-time employee is paid for about 2,080 hours a year (40 × 52). Far fewer of those hours end up on an invoice.
- Every non-billable hour still has to be paid for, so it gets priced into the hours you do bill.
- Hourly rate = (annual labor cost + share of overhead + target profit) ÷ billable hours.
- Pricing from 2,080 hours instead of your real billable hours is one of the most common reasons trades shops stay busy and broke.

## How do billable hours work?

Billable hours work as the denominator of your pricing. Every cost the business carries, from the tech's wage to the office rent, has to be recovered through the hours you sell. The fewer hours you sell, the more each one has to earn. That's why two shops paying the same wage can need very different hourly rates.

If you bill by the hour on [time and materials](https://www.brix.so/learn/time-and-materials), billable hours are the hours on the invoice. If you use [flat-rate pricing](https://www.brix.so/learn/flat-rate-pricing), they're the book hours built into each task price. Either way, the math that sets the rate is the same.

## Why are billable hours so much lower than paid hours?

Billable hours are lower because a field tech spends a big share of paid time on things no customer pays for: holidays and vacation, driving between jobs, loading the truck, picking up parts, training, meetings, callbacks and slow days with nothing booked. Each one is a normal part of running a service business, and each one comes out of the 2,080.

**Where a year of paid hours goes: one full-time tech (illustrative)**

| Hours | Running total | What it is |
| --- | --- | --- |
| 2,080 | 2,080 | Paid hours: 40 a week × 52 weeks |
| − 64 | 2,016 | 8 paid holidays |
| − 80 | 1,936 | 2 weeks paid vacation |
| − 40 | 1,896 | Paid sick days. That leaves 1,896 hours, or 237 eight-hour days, actually at work |
| − 237 | 1,659 | Unbilled drive time between jobs, about 1 hour a day |
| − 119 | 1,540 | Shop time: loading the truck, supply-house runs, paperwork, about 30 minutes a day |
| − 40 | 1,500 | Training, safety meetings, certifications |
| − 48 | 1,452 | Callbacks and warranty work you don't charge for |
| − 152 | **1,300** | Gaps: slow days, cancellations, no-shows, waiting on parts |

_Every line is an example. Pull your own from timesheets. In this example the tech bills 1,300 of 2,080 paid hours, or 62.5%._

## How do you set an hourly rate from billable hours?

Add up everything the hour has to pay for in a year (the tech's fully loaded cost, their share of company overhead and the profit you want), then divide by the hours you'll actually bill. The answer is the minimum labor rate. Materials markup can carry part of the overhead, which lowers the labor rate you need, but only if you really sell that much material.

**Billable hourly rate**

```
Hourly rate = (Annual labor cost + Overhead share + Target profit) ÷ Billable hours
```

Where:
- Annual labor cost = wages plus [labor burden](https://www.brix.so/learn/labor-burden) for the tech
- Overhead share = annual [overhead](https://www.brix.so/learn/overhead) divided across your billing techs
- Target profit = the profit dollars you want each tech's hours to produce
- Billable hours = hours you expect to sell, from your timesheets, not 2,080

> **Worked example: a five-tech HVAC shop**
>
> Illustrative numbers. Each tech earns $30 an hour and costs $79,188 a year with labor burden.
>
> Company overhead is $300,000 a year, split across 5 techs: $60,000 each. The owner wants $25,000 of profit per tech.
>
> Each tech needs to bring in $79,188 + $60,000 + $25,000 = **$164,188** a year in labor revenue.
>
> At 1,300 billable hours: $164,188 ÷ 1,300 = **$126.30 an hour**.
>
> If the owner had divided by 2,080 paid hours instead, the rate would be $78.94. Every billed hour would come up $47.36 short, about $61,600 a year per tech, which wipes out the profit and part of the overhead.

The [contractor hourly rate calculator](https://www.brix.so/tools/contractor-hourly-rate-calculator) runs this with your own numbers, and the [job pricing calculator](https://www.brix.so/tools/job-pricing-calculator) applies the rate to a full job with materials.

## Billable hours by trade

How hours leak away depends on the work. Short service calls lose time between jobs; long project work loses it to weather, inspections and waiting.

**Where billable hours leak in each trade**

| Trade | Typical work pattern | Biggest non-billable drains | Pricing implication |
| --- | --- | --- | --- |
| HVAC | Many short service calls in peak season; longer installs year-round | Shoulder-season slow days, drive time, warranty work on equipment | Rate must carry the slow months, not just July |
| Plumbing | Short service and emergency calls | Supply-house runs, unbilled diagnostic time, callbacks | Good truck stock pays for itself in billable hours |
| Electrical | Mix of service calls and multi-day jobs | Permit pulls, inspection waits, material pickups | Bill trip and inspection time explicitly on project work |
| Roofing | Multi-day crew jobs | Weather days, tear-off surprises, travel to job sites | Price per square or per job; crew-day rates must cover rain-outs |
| Landscaping | Route-based maintenance and seasonal installs | Loading and unloading equipment, drive between stops, winter downtime | Route density matters as much as the hourly rate |
| Cleaning | Several short visits a day | Travel between homes, key pickup, rework | Per-visit prices must include the drive to get there |

## Billable hours vs. technician utilization

Billable hours are a count; [technician utilization](https://www.brix.so/learn/technician-utilization) is the same count as a share of paid hours. 1,300 billable hours out of 2,080 paid is 62.5% utilization. Use billable hours to set prices, and utilization to track whether dispatching, routing and training are getting more of each tech's day onto invoices.

## Should you bill for drive time?

You have to recover drive time somewhere, but you don't have to bill it as a line item. Shops either charge a trip or service fee, build average drive time into flat-rate task prices, or spread it across billable hours as in the example above. What doesn't work is ignoring it: an hour a day of unbilled driving is more than 200 hours a year per tech.

## Common billable hour mistakes

- **Dividing by 2,080.** That assumes every paid hour gets billed. None of your techs bill all of them.
- **Using the best week as the baseline.** Peak-season weeks look great. Use a full year, slow months included.
- **Forgetting the owner's hours.** If you run calls, count your billable hours; if you don't, your salary belongs in overhead.
- **Not tracking it.** Without timesheets that separate job time from everything else, billable hours are a guess. See [job costing](https://www.brix.so/learn/job-costing).
- **Cutting the rate to win work.** A lower rate only works if it books enough extra hours to make up the difference. Usually it doesn't.

BRIX records crew clock-ins and job hours on payroll-ready timesheets and schedules the right tech to each job by skills, location and availability, so you can see real billable hours instead of guessing.

- [Crew timesheets](https://www.brix.so/#use-cases): Clock-ins, job hours and payroll-ready timesheets.
- [Scheduling and dispatch](https://www.brix.so/features/scheduling-dispatch): Assigns the right crew to the right job based on skills, location and availability.

## Frequently asked questions

### How many billable hours are in a year?

A full-time employee is paid for about 2,080 hours a year (40 hours × 52 weeks), but the billable share is much lower once holidays, vacation, drive time, shop time, training and callbacks come out. In the example on this page, a tech bills 1,300 hours. Use your own timesheets to find your number.

### How much should I charge per hour as a contractor?

Add your annual labor cost with burden, your share of overhead and your profit target, then divide by the hours you'll actually bill. A tech costing $79,188 a year with $60,000 of overhead and a $25,000 profit target needs $126.30 an hour at 1,300 billable hours. Your market sets a ceiling, but this math sets the floor.

### How much should I charge per hour for HVAC work?

There's no single right rate, because it depends on your wages, burden, overhead and billable hours. Work it out with the formula on this page: total annual cost and profit per tech, divided by realistic billable hours. Then check that rate against what the local market pays for the same work.

### Is drive time billable?

It can be, through a trip charge or by billing portal to portal, but many shops build it into their rates instead. Either way, drive time has to be recovered in your prices. An hour a day of unbilled drive time adds up to over 200 hours a year per tech.

### What's the difference between billable and non-billable hours?

Billable hours are time you can charge a customer for, such as diagnosing, repairing or installing. Non-billable hours are paid time nobody is charged for directly: driving between jobs, loading the truck, training, meetings, callbacks and paid time off.

### Do billable hours matter with flat-rate pricing?

Yes. Flat-rate task prices are built from estimated hours times an hourly rate, and that rate still has to come from your cost divided by billable hours. Flat rate changes who keeps the benefit of fast work, not the math underneath.

## Related

- [What Is Technician Utilization?](https://www.brix.so/learn/technician-utilization)
- [What Is Labor Burden?](https://www.brix.so/learn/labor-burden)
- [What Is Overhead, and How Do Contractors Calculate It?](https://www.brix.so/learn/overhead)
- [What Is Flat Rate Pricing?](https://www.brix.so/learn/flat-rate-pricing)
- [What Is Time and Materials Pricing?](https://www.brix.so/learn/time-and-materials)
- [What Is Gross Profit per Hour?](https://www.brix.so/learn/gross-profit-per-hour)
- [How Much to Charge per Hour as a Contractor](https://www.brix.so/tools/contractor-hourly-rate-calculator)
- [Job Pricing Calculator for Contractors](https://www.brix.so/tools/job-pricing-calculator)
- [How to Price Contracting Jobs for Profit: The Complete Guide](https://www.brix.so/guides/how-to-price-jobs)
- [Maintenance Agreement Pricing Calculator](https://www.brix.so/tools/maintenance-agreement-calculator)

---
Written by BRIX Editorial Team. Last updated 2026-10-12.
Canonical: https://www.brix.so/learn/billable-hours