Every agency tracks billable hours, because billable hours turn into invoices. Far fewer track non-billable time with the same care, and that is where the margin quietly disappears. Internal meetings, sales calls, rework the client will not pay for and studio admin are all real costs. If they are not tracked, your reports describe a business that is more profitable than the one you actually run.
This guide explains what counts as billable and non-billable time, how to mark each entry without adding friction, and how a billable hours tracker turns both into numbers you can act on.
What counts as billable time
Billable time is any work you will charge a client for, either directly by the hour or indirectly against a fixed fee or retainer. The test is simple: if the client would expect to see this work reflected in what they pay, it is billable.
- Design, development, writing and strategy delivered for a client project.
- Client meetings and calls that move the project forward.
- Revisions within the agreed scope.
- Project management that the contract includes.
What counts as non-billable time
Non-billable time, also called internal time, is work that keeps the agency running but is not charged to a client. It is not wasted time. It is the cost of doing business, and it belongs in your rates.
- Internal meetings, hiring and training.
- Sales, proposals and pitches for new work.
- Rework caused by your own mistakes, which you choose not to charge.
- Tooling, admin and studio maintenance.
| Activity | Usually | Why |
|---|---|---|
| Client workshop | Billable | Delivers the agreed scope |
| Proposal for a new client | Non-billable | No client is paying yet |
| Fixing a bug you introduced | Often non-billable | Your quality cost, not theirs |
| Scope the client added mid-project | Billable | New work, new value |
| Team retrospective | Non-billable | Improves how you work, not what they get |
Non-billable time is not a failure to bill. It is the price of running the studio, and you can only price it in if you measure it.
Why tracking only billable hours misleads you
When a team tracks only billable hours, two things go wrong. First, the hours that are tracked look like the whole working week, so utilisation appears higher than it is. Second, the cost of winning and running work never reaches your reports, so you cannot tell which clients or services are worth keeping.
Tracking both gives you a ratio you can trust: the share of tracked time that is billable. Watching that share move from month to month tells you more than any single total. For the full margin model, see how to measure client project profitability without slowing down creators.
How to mark entries without adding friction
The classic mistake is asking people to decide billability before the timer starts. It is one more question at the worst moment, and it pushes people to start late. A better setup has three parts:
- Set a billable default per project. Client projects default to billable, internal projects to non-billable, so most entries are right without anyone touching them.
- Let people correct it as they go. One click on the entry should switch it between billable and internal while the timer runs or afterwards.
- Review exceptions weekly, not every entry. Look for billable entries on internal projects and the other way round.
START -> timer runs, nothing required
(working) -> project chosen, billable default applied
(exception) -> one click switches billable <-> internal
STOP -> entry saved with its billable flag
WEEKLY -> review entries that differ from their project defaultTurning both kinds of time into decisions
Once both kinds of time are tracked, a billable hours tracker can answer the questions agency owners actually ask:
- Which clients take the most unbilled effort? Filter non-billable entries by client project.
- How much does winning work cost? Total the time on proposals and pitches each month.
- Are our rates high enough? Compare billable amounts with the full cost of the hours behind them.
Amounts should be calculated, not typed: billable time multiplied by the right rate. Internal time carries no amount, but it still counts toward the hours you pay for. The setup is covered in billable rates per person and per workspace.
How Tickr handles billable and non-billable time
Tickr is agency time tracking software built around this split. Every entry carries a currency mark: lit means billable, unlit means internal. Projects have a billable default, so the mark is usually right before anyone thinks about it, and it can be switched while the timer runs, afterwards on the entry, or for many entries at once from reports.
The dashboard shows Tracked and Billable totals for the period next to the period before, and reports calculate amounts from each person's rate or the workspace default. Starting a timer never asks for billability first; the docs cover the details, and why required fields belong on STOP, not START explains the thinking.
