Everyone handles unbillable hours differently. In the beginning of a self-employed career many people don't account for it at all -- but they learn quickly.

You can't bill clients for marketing. You can't bill clients for research or the time spent learning a new skill or for the time you spend trying to figure out how to account for all those unbillable hours.

It may seem trite and obvious, but all of those unbillable hours need to be tracked just as closely as all of those billable hours. They all become part of the grand catchall of overheard. The cost of doing business, right along with those business cards, printer ink and that office chair.

Overhead cannot be billed to clients hourly but it does factor into your rate which is why they become so important. In some industries, unbillable hours can account for more than half of the total hours spent working.

This is why it makes sense to charge return clients a preferred rate, and maintenance contracts the best rate you can afford. For these clients, you actually can afford to bill at a lower rate and spend more of your hours working. In order to remain competitive you need to find ways to reduce the number of billable hours.

Fostering good relationships and partnerships serves not only you, but he client as well.