Consulting and billable hours – What should you charge?

Thinking of starting a consulting business with multiple clients? I received some really good advice recently that I want to share.
 
Billable client hours are not the same as the hours that you put in at your 9-5 job. Projects ramp up and ramp down, so sometimes you only do intense work at your job 20% of the time. Sometimes it’s 80%. It just depends on what’s going on.
 
So if you expect to have 8 billable hours a day, every day, you’re going to burn yourself out. That’s like working at a job where you have zero bathroom breaks or pizza parties.
 
The advice I got was: You should shoot for 100 billable hours each month.
 
It’s a very different scenario from the average 160 hours per month you’d be putting into a full-time job, but these hours are inherently different. You’re not billing for the time you’re scrolling through Facebook or organizing your Dropbox folders like you would normally do at a job.
 
So what do you charge your clients? Here’s the equation:
 
(Yearly target income) / (1200) = Your Hourly Rate
 
Now, this doesn’t mean that you won’t have to put in 8 hours of work each day to keep up with your business, marketing, calls with potential clients, invoicing, or whatever. You just need to allow 4-5 hours to do solid work for clients.