Three to One (Freelancing)
When you lookup freelancing, you always come across the comment that you need to figure your billable hours at a thee to one ratio to unbillable hours. Billable hours are of course the time you can charge your clients for. Unbillable hours are those you have to put in but cannot directly bill. In other words if you actually get paid 20 hours a week, you are working 60 hours a week. But how did they come up with that three to one figure?
If you are self-employed, you actually have three jobs.
The first job is whatever you are doing to make your money: writing, photography, webpage design, etc.
The second is all the time spent looking for those jobs: visiting potential clients, keeping up your webpage, making phone calls, job research, etc.
And the third job you have to do is run your business. Running your business is of course all those things you have to spend time and money on to be in business: Keeping records, doing your taxes, buying supplies, etc.
So you have three jobs, each of which takes up approximately one third of your time, but you can only bill for the first of them. So you have to bill three times what you want to earn per hour. It is simple arithmetic actually.