Billing Examples

These examples show how the billing formula applies in real scenarios. Each example walks through the calculation step by step.

Quick Reference

The billing formula for each requirement:

Billable = MIN(maximum, MAX(average, actual))

Scenario	Actual vs Estimate	Result
Fast completion	Actual < Average	Bill the average
Normal completion	Average ≤ Actual ≤ Max	Bill the actual
Overrun	Actual > Max	Bill the max (cap)

Example 1: Fast Completion (Banked Time)

A developer finishes efficiently, beating the quoted average. Task: Update checkout flow Requirement: Development, sized M (3-6 hours)

Metric	Value
Average	4.5 hours
Maximum	6 hours
Actual logged	3 hours

Calculation:

Billable = MIN(6, MAX(4.5, 3))
         = MIN(6, 4.5)
         = 4.5 hours

Result:

Client pays: 4.5 hours (the quoted average)
Team worked: 3 hours
Banked time: 1.5 hours (profit margin)

Banked time rewards efficiency. The team completed quality work in less time, creating margin for the agency.

Example 2: Normal Completion

Work takes longer than average but stays within the quoted range. Task: Build product filters Requirement: Development, sized L (8-16 hours)

Metric	Value
Average	12 hours
Maximum	16 hours
Actual logged	14 hours

Calculation:

Billable = MIN(16, MAX(12, 14))
         = MIN(16, 14)
         = 14 hours

Result:

Client pays: 14 hours (actual time)
Team worked: 14 hours
No banked time or overage

This is the expected outcome when estimates are accurate but the work is on the complex side of the range.

Example 3: Overrun (Capped)

Work exceeds the maximum, but the client is protected by the cap. Task: Integrate payment gateway Requirement: Development, sized L (8-16 hours)

Metric	Value
Average	12 hours
Maximum	16 hours
Actual logged	22 hours

Calculation:

Billable = MIN(16, MAX(12, 22))
         = MIN(16, 22)
         = 16 hours

Result:

Client pays: 16 hours (the maximum cap)
Team worked: 22 hours
Overage: 6 hours (absorbed by agency, non-billable)

Overage is a red flag. Review why this happened—was the scope larger than expected? Was there technical debt? Should the estimate have been XL?

Example 4: Multi-Requirement Task

A task with both design and development, each calculated separately. Task: Redesign account settings page

Design Requirement (sized M)

Metric	Value
Average	4.5 hours
Maximum	6 hours
Actual logged	3.5 hours

Billable = MIN(6, MAX(4.5, 3.5)) = 4.5 hours
Banked: 1 hour

Development Requirement (sized L)

Metric	Value
Average	12 hours
Maximum	16 hours
Actual logged	15 hours

Billable = MIN(16, MAX(12, 15)) = 15 hours
Banked: 0, Overage: 0

Task Totals

Metric	Design	Development	Total
Quoted (avg)	4.5h	12h	16.5h
Actual	3.5h	15h	18.5h
Billable	4.5h	15h	19.5h
Banked	1h	0	1h
Overage	0	0	0

Result: Despite development taking longer, the design efficiency created 1 hour of banked time overall.

Example 5: Tiny Task (XS)

Small tasks use the same formula, just with smaller numbers. Task: Fix typo on contact page Requirement: Development, sized XS (0-30 mins)

Metric	Value
Average	15 mins
Maximum	30 mins
Actual logged	10 mins

Calculation:

Billable = MIN(30, MAX(15, 10))
         = MIN(30, 15)
         = 15 mins

Result:

Client pays: 15 mins
Team worked: 10 mins
Banked: 5 mins

Even tiny efficiency gains add up across many small tasks.

Example 6: Large Task (XXL)

Large tasks follow the same rules but with bigger stakes. Task: Build customer portal MVP Requirement: Development, sized XXL (40-120 hours)

Metric	Value
Average	80 hours
Maximum	120 hours
Actual logged	95 hours

Calculation:

Billable = MIN(120, MAX(80, 95))
         = MIN(120, 95)
         = 95 hours

Result:

Client pays: 95 hours (actual)
Within the quoted range
No banked time or overage

Common Patterns

Pattern: Consistent Small Gains

When the team regularly finishes 10-20% under average:

Task	Avg	Actual	Billable	Banked
Task A	8h	7h	8h	1h
Task B	4h	3.5h	4h	0.5h
Task C	12h	10h	12h	2h
Task D	6h	5h	6h	1h
Total	30h	25.5h	30h	4.5h

Interpretation:

Team is efficient
Estimates may be slightly conservative
Good profit margins

Pattern: Occasional Overruns

Mixed results with some tasks going over:

Task	Avg	Max	Actual	Billable	Result
Task A	8h	12h	6h	8h	+2h banked
Task B	4h	6h	4h	4h	neutral
Task C	12h	16h	18h	16h	−2h overage
Task D	6h	8h	5h	6h	+1h banked
Total	30h	42h	33h	34h	+1h net

Interpretation:

Mostly healthy
Task C needs investigation—why the overrun?
Net positive despite one problem task

Pattern: Systemic Underestimation

When overruns are frequent:

Task	Avg	Max	Actual	Billable	Overage
Task A	8h	12h	14h	12h	2h
Task B	4h	6h	8h	6h	2h
Task C	12h	16h	20h	16h	4h
Total	24h	34h	42h	34h	8h

Interpretation:

Serious estimation problem
8 hours of non-billable work
Need to review estimation process
Consider bumping future tasks up a size

Month-End Rollover Example

Showing how billable hours affect next month’s allocation. Client: TechStart Inc Monthly allocation: 60 hours

Month 1 Tasks

Task	Avg	Billable
Homepage redesign	16h	18h
Blog integration	12h	14h
Contact form	8h	8h
Mobile fixes	10h	12h
Performance audit	8h	10h
Total	54h	62h

Rollover calculation:

Allocated: 60 hours
Billable: 62 hours
Rollover: 2 hours

Month 2

Base allocation: 60 hours
Minus rollover: 2 hours
Available: 58 hours

PM plans Month 2 work to fit within 58 hours.

Billing Model

The formula explained

T-Shirt Sizing

Size definitions and ranges

Hour Rollover

How hours carry between months

Efficiency

Understanding banked time and overage

Financial Metrics

Billing & Pricing

Estimation

Quick Reference

Example 1: Fast Completion (Banked Time)

Example 2: Normal Completion

Example 3: Overrun (Capped)

Example 4: Multi-Requirement Task

Design Requirement (sized M)

Development Requirement (sized L)

Task Totals

Example 5: Tiny Task (XS)

Example 6: Large Task (XXL)

Common Patterns

Pattern: Consistent Small Gains

Pattern: Occasional Overruns

Pattern: Systemic Underestimation

Month-End Rollover Example

Month 1 Tasks

Month 2

Billing Model

T-Shirt Sizing

Hour Rollover

Efficiency

​Quick Reference

​Example 1: Fast Completion (Banked Time)

​Example 2: Normal Completion

​Example 3: Overrun (Capped)

​Example 4: Multi-Requirement Task

​Design Requirement (sized M)

​Development Requirement (sized L)

​Task Totals

​Example 5: Tiny Task (XS)

​Example 6: Large Task (XXL)

​Common Patterns

​Pattern: Consistent Small Gains

​Pattern: Occasional Overruns

​Pattern: Systemic Underestimation

​Month-End Rollover Example

​Month 1 Tasks

​Month 2

​Related

Billing Model

T-Shirt Sizing

Hour Rollover

Efficiency

Quick Reference

Example 1: Fast Completion (Banked Time)

Example 2: Normal Completion

Example 3: Overrun (Capped)

Example 4: Multi-Requirement Task

Design Requirement (sized M)

Development Requirement (sized L)

Task Totals

Example 5: Tiny Task (XS)

Example 6: Large Task (XXL)

Common Patterns

Pattern: Consistent Small Gains

Pattern: Occasional Overruns

Pattern: Systemic Underestimation

Month-End Rollover Example

Month 1 Tasks

Month 2

Related