A useful number. A clearer decision.
What does your
agency need to charge?
Find the hourly rate implied by your costs, billable capacity, and target margin. Change the assumptions to see what your business needs to cover.
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Nothing hidden in the math
Here’s how
the rate is calculated.
Annual cost = compensation + other operating costs.
Billable hours = delivery FTE × working weeks × weekly hours × utilization ÷ 100.
Break-even rate = annual cost ÷ billable hours.
Target revenue = annual cost ÷ (1 − margin ÷ 100).
Target rate = target revenue ÷ billable hours.
Illustrative example in USD
$100,000 in costs.
2,000 billable hours.
Two FTE × 50 weeks × 40 hours × 50% utilization gives 2,000 billable hours. With $80,000 compensation and $20,000 other costs, break-even is $50.00 per hour.
A 20% margin requires $125,000 revenue and a rate of $62.50 per hour. Adding 20% to costs would give $60.00 per hour, which is only a 16.67% margin.
Good inputs make the estimate useful.
Include the costs you need the work to cover, without counting compensation twice. Taxes, financing, discounts, uncollected invoices, and omitted costs change the result unless included in your assumptions. Working weeks already exclude leave; utilization allows for non-billable time within those weeks.
Use the result alongside your actual scope, client value, and commercial agreement. ClientCee’s time records and invoicing help you keep track of the work behind that decision.
Create your first invoicePrepared by ClientCee. Details checked . Examples are illustrative.
Put it into practice