Billing Hour Segments
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For those who do hourly contract work, how do you typically segments your billable hours? In tenths? Quarters?
In the saxophone studio world, and hour lesson is an hour lesson. There are no situations which require time segments. In the IT world, time to complete tasks is always variable.
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When remote it's 15 mins. When travel is involved (including in town) a min of 1 hour, then 15 min from the time I walk out my door until I return. Though often personally I don't charge for the return trip.
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I usually round to the nearest 15 minutes. If I let ConnectWise Manage keep track of the time (it has start stop timers) it tracks it by default to the 0.05 and I haven't changed it.
What @Dashrender is describing is per trip charges and minimum trip charges. These are usually spelled out in your agreement as well as if you charge drive time and if you charge that at a different rate.
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The other thing I would add if you're trying to figure out how to create your agreements, is if you charge a 15 minute minimum for each task. Lets say you have a "needy" client. They email you every half hour with a quick question. How do you bill? Myself I convert those clients to managed clients.
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@mike-davis said in Billing Hour Segments:
The other thing I would add if you're trying to figure out how to create your agreements, is if you charge a 15 minute minimum for each task. Lets say you have a "needy" client. They email you every half hour with a quick question. How do you bill? Myself I convert those clients to managed clients.
"Managed clients" are billed with a fixed rate?
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@eddiejennings yes. Of course there are different ways of doing this. There is even on hybrid of managed vs break fix that is the prepaid block of hours classification. The next up is the managed contract that has covered items and non covered items. Typically what you see here is remote is covered and on site is additional billable. The premier offering is the AYCE (All you can eat) plan.
Some companies break out their plans by a bronze, silver, and gold offering. They do things like patching is covered, but application support is not at the bronze level and at the gold plan even the office 365 licenses are covered.
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If you have a bunch of questions about the MSP world I would suggest Managed Services in a Month by Karl Palachuk:
https://www.amazon.com/Managed-Services-Month-Successful-Consulting-ebook/dp/B078J7ZKV1/r
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@eddiejennings said in Billing Hour Segments:
@mike-davis said in Billing Hour Segments:
The other thing I would add if you're trying to figure out how to create your agreements, is if you charge a 15 minute minimum for each task. Lets say you have a "needy" client. They email you every half hour with a quick question. How do you bill? Myself I convert those clients to managed clients.
"Managed clients" are billed with a fixed rate?
That's the assumption, yes, and why MSP is synonymous with fixed rate. MSP = managed clients = fixed / flat rate.
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For customers paying "by the hour" we normally do 15 minute increments. Anything less and the overhead of tracking costs more than the cost of the work, it gets totally silly. Lots of agreements will be something like "two hour minimum with fifteen minute increments after that."
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It's important to remember to include things like documentation and task switching in the billable time, internal employees do that of course. If you don't as a consultant, you quickly figure out why that doesn't work - you have loads of time that is normally part of your workload for a task but that you start doing on your own time. Before long, you are working for free and can't figure out why.
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@scottalanmiller said in Billing Hour Segments:
For customers paying "by the hour" we normally do 15 minute increments. Anything less and the overhead of tracking costs more than the cost of the work, it gets totally silly. Lots of agreements will be something like "two hour minimum with fifteen minute increments after that."
^ This. Never forget all sorts of side work. Billing and documentation are just two examples.
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I charge by 8 minutes increments, that's just me because I go through tickets that way in average.
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@dbeato said in Billing Hour Segments:
I charge by 8 minutes increments, that's just me because I go through tickets that way in average.
Curious. How do you account for the last few minutes or an hour? Do you just have the last segment be 12 minutes?
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@eddiejennings said in Billing Hour Segments:
@dbeato said in Billing Hour Segments:
I charge by 8 minutes increments, that's just me because I go through tickets that way in average.
Curious. How do you account for the last few minutes or an hour? Do you just have the last segment be 12 minutes?
When would you need to round to an exact hour?
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@eddiejennings said in Billing Hour Segments:
. How do you account for the last few minutes or an hour? Do you just have the last segment be 12 minutes?
Actually I charge by 0.2 hour segments... that is my bad...
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@scottalanmiller said in Billing Hour Segments:
@eddiejennings said in Billing Hour Segments:
@dbeato said in Billing Hour Segments:
I charge by 8 minutes increments, that's just me because I go through tickets that way in average.
Curious. How do you account for the last few minutes or an hour? Do you just have the last segment be 12 minutes?
When would you need to round to an exact hour?
Hmm. I suppose you don't. If your task goes into minute 56, you'd charge for the hour, so it wouldn't matter.
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How granular do you want or even need to be? you could split Deskside and Server and have separate time slices for each.
Deskside at 15 min increments
Server as either 6, 10, 30, 60 min increments. -
If you guys and gals charge for example $100/hour, do you charge the same rate for travel or a discounted rate?
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@brandon220 I've seen it done both ways. I charge the full rate. If I'm sitting in a car I usually can't be working on anything else. On the other had I rarely charge drive time since I focus my business on a particular geographic area.
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@mike-davis Same here. I have done it both ways.
