How Much of My Interior Design Team’s Time Should Be Billable?
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In a recent live Q&A call with interior design business owners (we call them Happy Hour calls, because they’re so much fun!), an interior designer asked what percentage of her time and her team’s time should be billable.
Percent billable relates to the number of hours in a work week, month, or year that are billed directly to a client and, therefore, generate revenue. Non-billable hours are work hours that cannot be billed, which would include anything not specifically related to a client project (see descriptions below).
The higher the percentage of your and your team’s work time that is billable, the more revenue you bring in, relative to salary and wage costs and business overhead. So, higher is better. But what percentage levels should you strive for within your interior design business to be optimally profitable, at the same time devoting appropriate time to marketing, team development, and company growth efforts? We’ll provide some guidelines here.
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The percentage of billable time is an important data point to track. You’ll likely want to track it per team member and across the team. This is true whether you bill hourly or set flat fees for your design projects. Percent billable still provides sound data for individual and team productivity.
How to Calculate Billable Hours
To calculate the percentage billable, take the number of billable hours and divide by the total number of hours worked (billable + non-billable). For instance, for a 40-hour work week, if 35 of those hours are billable, that would be a rate of 87.5% billable (35 ÷ 40 = .875).
Most interior design firms provide employees with a billable percentage goal that makes them more aware of their own productivity. Often, raises or incentive pay are tied to meeting billable percentage goals. With such a goal in mind, an employee becomes more cognizant of reducing non-billable work time and devoting the most time possible to client-serving efforts.
What Are Billable vs. Non-Billable Hours in Interior Design?
Billable activities include anything associated with a client project. This would include:
any time spent communicating or interfacing with the client
any work time devoted to forwarding the client’s project, obviously including design and documentation work, but also including setting up a project schedule, organizing resources devoted to the project, team meetings associated with the client project, interfacing with vendors regarding the project, writing purchase orders and tracking shipments, and invoicing and billing for that client project
for the owner or design manager, any time spent managing, directing, or overseeing the team’s time on a client project
Non-billable activities include those things not directly associated with a client project:
marketing activities
office cleanup and organization
setting up systems
goal setting and scheduling
team meetings not associated with a client project
discovery calls
travel time (if you do not charge for travel time)
free consultations (if you offer them)
off-boarding activities such as archiving projects
personal development time, such as participating in workshops and trainings, or completing CEUs (continuing educational requirements)
Billable Hour Guidelines by Role in an Interior Design Business
There are no hard-and-fast formulas about billable time, but of course, the higher, the better. Here are some guidelines:
For an interior design firm that includes several team members, the business owner will have the least percentage of billable time, perhaps as low as 30%, particularly if they spend time in:
Overseeing marketing, new business development, company growth
Website and portfolio development, including project photography, and pitching editors for publication of work
Administrative tasks: company goal setting, strategic planning, system setup
Team hiring and training, personnel development, leadership activities
If the interior design business owner spends more time in a Design Director role, with a well-established business and a trained staff, that time of overseeing and directing the team’s efforts on a particular project is certainly billable. In this case, the owner’s rate should exceed 50% billable.
And for a new interior design business owner who is a solopreneur, the levels of billability will escalate. Initially, upon establishing a business, a solopreneur will spend a lot of time doing new business development, setting up systems and processes, and establishing vendor relationships (and therefore, not as much time billing clients as they are setting up the foundation of their business). Then, once this business groundwork has been laid, a solopreneur’s time will increasingly be devoted to client interaction and project execution. An appropriate percent billable goal for an established solopreneur may be 70% to 80%.
For an interior design business with a team (three or more people working in the business), there will be variation in billability across roles. In general, the higher up the ladder an individual’s responsibilities go, the lower their billable rate will likely be, because they will be involved with business development, marketing, and leadership tasks. Most designers we work with want to step out of the day-to-day, so naturally, as you scale your business, your billable portion of hours will go way down.
A full-time senior designer, not involved in team development or managerial duties, should have a billable rate of 80% to 90%. They may be involved with discovery calls, staff meetings, or meetings with vendors, so those activities will deduct from being fully billable across a work week. But the bulk of their time will be spent on project-related work.
A junior designer’s time should be mostly project-focused as well, therefore their % of billable hours will be high. However, a junior designer or intern may also be assigned to design library maintenance, as well as more administrative duties such as social media postings, process setup, and system maintenance.
A project manager’s time should be mostly project-focused. Therefore, their % of billable hours will be high. If this person manages internal company projects as well as client projects, their billable time may be lower.
A team member who does CAD drafting and/or digital renderings will have a high billable rate goal—perhaps 85% to 90%. They likely have little to no client interface and are not involved with any managerial tasks. Their work should almost entirely be on client project work, with perhaps rare activities such as attending a staff meeting.
Set Realistic Billable Hour Goals Based on Job Descriptions
📝One important thing to note:
Your team’s billable time will (and should) correlate with their job description (you should have one for each team member!)
So, if one team member’s job description lists managerial work, administrative work, and non-client-facing work, that team member will naturally have fewer billable hours than someone like a design assistant, for example, whose job description likely lists mostly tasks related to client work.
Paid Time Off and Its Impact on Annual Billable Hours
It is very difficult for anyone working at an interior design firm—large or small—to be 100% billable, meaning all hours worked each week are billable to a client.
For full-time, salaried employees, there are typically 2080 available work hours per year (52 weeks x 40 hours per week). Paid vacation time (typically 80 hours annually), paid sick leave (perhaps 5 days = 40 hours), and paid holidays (usually 6 days = 48 hours) are deducted from the standard 2080 hours.
That’s 168 annual work hours that are automatically non-billable. 168 hours is 8% of 2080 hours. That means that, even if an employee were to be 100% productive during their time at work (which is impossible), they would still only be 92% billable annually.
The nature of the interior design industry, more often than not, though, is that overtime work is often a reality as major deadlines approach. It doesn’t take much overtime for that 92% after-paid-time-off rate to inch back closer to a 95% to 100% rate over the work year. So, even with paid time off, a 95% billable rate may be possible, provided the project work is very consistent AND you have a support person to assist the person who is working 95% billable. Someone will need to be “catching” their non-billable work and completing it for them.
Avoiding Downtime: Why a Full Pipeline Is Critical
Down time—time between active client projects—is the bane of productivity for an interior design firm. If your employees are salaried, you pay them even when there is little or no project work. Time between projects may be a great time to organize the office, implement new systems, or develop new marketing strategies. Great! But none of those efforts bring in any revenue directly.
This is why it’s so important to fill your pipeline with contracted client projects, all cued up to launch as soon as the previous projects wrap. Make sure to build out a paid waitlist of clients (these email templates will help).
Use Billable Time to Improve Profitability and Planning
Track billable hours by person and role, even if you charge flat fees.
Align each team member’s billable target with their job description.
Use hourly billing data to price new projects.
Most full-time roles will cap around 85–90% billable (and this is high!) due to paid time off and internal meetings.
Keep your pipeline full and staggered to avoid costly downtime between projects.
