Effective hourly rate calculator
Your quoted rate is marketing; your effective rate is accounting. Divide what a project paid by every hour it consumed, billed or not, and you find out which clients actually pay well.
Results
Effective hourly$80per hour
- Nominal hourly (billed only)
- $100
- Share of time unbilled
- 20%
Estimate
workingfigures.com/calculators/effective-hourly-rate-calculator
The formula
Effective = earnings ÷ (billed + unbilled hours). Nominal = earnings ÷ billed hours. The gap between them is the client's hidden discount.
What this ignores
Taxes and expenses (both rates are gross), and the pipeline cost of landing the client. Track one project honestly and the number changes how you quote the next one.
FAQ
- My effective rate is way below my quoted rate. Normal?
- A 15-25% gap is normal friction. A 40%+ gap means the client, or your process, is eating you: unbounded revisions, meeting sprawl, or scope creep. The scope creep calculator prices that pattern per year.
- Should I bill for calls and emails?
- On hourly engagements, yes, say so upfront: project communication is project work. On fixed fees, price them in via your buffer. What never works is silently absorbing them and resenting it.
- How do I use this number?
- Rank clients by effective rate once a quarter. The bottom client usually deserves a raise, a process fix, or a goodbye, and the top one deserves more of your calendar.