Freelancers: the difference between hours open and hours billed
· 6 min read
Hours open is the span your working day was actually running, from the first work app in front to the last; hours billed is the subset a client paid for. Every freelancer has both numbers, most only track the second, and the ratio between them is what decides whether the rate on your website is a living or a story.
Two clocks, and most people watch only one
When you invoice, you report hours billed. When you feel tired, you are feeling hours open. These are different clocks, and the trouble with running a freelance business on the first alone is that every decision about rates, capacity and energy gets made with half the data.
Hours billed is easy to know, because you wrote it on an invoice. Hours open is harder, because nobody asks you for it and it does not feel like a number. It feels like “a long day.” But it is a number, and it is the one that explains why a week of 28 billed hours can leave you as flat as a week of 50.
The distinction is a cousin of the one in the difference between time spent and time worked, seen from the business side. Time spent is hours open. Time worked is somewhere between the two. Hours billed is smaller still.
Measuring hours open
Hours open is the one you cannot reconstruct from an invoice, so it has to be recorded as it happens. You have three options.
- Write down the start and end of every day. Cheap, and you will forget on the days that matter most (the ones that ran to 9 pm).
- Use a timer and remember to start it. Works for people who are good at starting timers. If you were one of those people, you would not be reading this.
- Let the Mac notice. Punchcard does this from the menu bar: it records which app is in front during the day, and at your closing time prints a receipt listing each app with its time and a total at the bottom. The total is hours open. If the day ran past closing time, the receipt comes out late, headed SORRY WE MISSED YOU, with the real total on it, which is precisely the day you needed to see.
Whichever method you use, hours open should include everything: the mail at 7:40 am, the proposal over lunch, the file you “just exported” after dinner. The clock is open when you are working, not when you are being paid.
Measuring hours billed
This one you already have, in the invoices. But make it consistent with hours open before comparing the two: count billed hours in the same weeks as the open hours you measured, and count them when they were worked, not when they were invoiced. A fixed-fee job counts as the hours you actually spent on it, which you will need to estimate from your notes if you did not track them; the post on estimating hours when you never tracked the last job shows how.
A tracker that records app names cannot tell you this number. Punchcard, specifically, has no clients, projects, rates or invoices, and it will not split a day into “for Client A” and “for Client B.” It gives you the day total and the shape of the day by app. Hours billed comes from your invoices and a one-line note per day of who the hours were for.
The ratio, and what a normal one looks like
Divide billed by open. A week of 38 hours open and 24 billed gives 0.63. That means for every hour the business was running, a client paid for 38 minutes.
There is no single correct ratio, and anyone who tells you the right number is guessing. It varies by field, by how you price, by how much marketing the work needs, and by whether you count evenings. What is useful is not the number itself but three things about it:
- Whether it is stable. A ratio that swings from 0.8 one week to 0.3 the next means your pipeline is lumpy, and that is a planning problem before it is a rate problem.
- Whether it is trending. A slow slide from 0.7 to 0.5 over six months is worth catching early. It usually means a client relationship that has quietly grown unbilled hours.
- Whether it matches your pricing. If you set your rate assuming you would bill most of your hours, and the ratio says you bill half, your rate is wrong by a factor you can now name.
What lives in the gap
The gap between the two clocks is not waste. Most of it is the business. Sorting the gap into its parts is the useful step, and a receipt itemized by app makes it much easier because the apps are a proxy for the activity.
Selling. Proposals, calls, follow-ups. Unbillable and essential. Mail and a document app at the top of a receipt on a day with few billed hours is usually this.
Running the business. Invoices, bookkeeping, software, the website. A spreadsheet and a browser.
Unbilled client work. The extra round, the reading before starting, the reply at 10 pm. This is the part of the gap you can actually shrink, by scoping tighter and charging for overage.
Drift. Time the clock was open and nothing was happening. The receipts show it as lines you did not expect: a messaging app at 50 minutes, a browser at 90. Nobody gets this to zero, but seeing it daily tends to shrink it without effort.
Overtime you did not count. The evening hours that feel like “finishing up” and do not make it onto any invoice. These tend to be invisible until something records them; overtime you didn’t notice is about exactly that.
Using the ratio: three decisions it makes easier
Pricing. Your stated rate needs to cover the gap. Take the income you need per hour open, divide by the ratio, and that is the rate you have to bill at. With a ratio of 0.6, earning 50 per open hour requires billing at about 83.
Capacity. When a new client asks whether you can take on 20 hours a week, the real question is whether you have 20 divided by your ratio of open hours available, which at 0.6 is 33. Most “yes” answers that turn into overwork are made with the billed number alone.
Closing time. If hours open is creeping up while hours billed is flat, the extra is coming from your evenings and producing nothing you can invoice. That is the signal to set a closing time and hold it; how to use a daily total to set a weekly limit walks through doing that with a tracker’s totals.
Questions
Should hours open include time away from the Mac?
Yes, if it was work: calls on the phone, reading a printed brief, a site visit. A screen-based tracker will not see those, so add them from your calendar or a note. For most desk-based freelancers they are a modest share and do not change the ratio much; for others they are most of the job and the Mac record is only part of the picture.
Is a low ratio always bad?
No. A ratio that is low because you are building a product, learning a skill or deliberately marketing is an investment you chose. A ratio that is low because client work has silently grown unbilled hours is a leak. The number is the same; the diagnosis is what matters, and the app breakdown on the receipt is usually enough to tell them apart.
Can Punchcard calculate the ratio for me?
No. It records hours open, by app, per day, and exports the lot as CSV. Hours billed come from your invoices. The division is yours, and for a week it takes about a minute.
What if I am on retainer and do not bill by the hour?
The ratio still applies; the billed hours are simply the hours the retainer was priced for. If the retainer assumes 15 hours a week and your open hours on that client are 25, you have found the number to raise it by.