Blended Rate Calculator
A blended rate is one hourly figure charged for work delivered by people on different salaries. Put the team in below to get the blended cost of an hour, and the margin between that and the rate you quote.
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How it is calculated
Formula: Blended rate = total value of hours worked / total hours worked
Weight each person by the hours they actually contribute, then divide. The mistake worth avoiding is averaging the rates instead. A team of one senior at $55 and three juniors at $18 does not blend to $36. Weighted by hours it lands far closer to the juniors, because that is who does most of the work.
What a blended rate is
A blended rate is one hourly price charged for work that several people at different levels actually did. Instead of billing a director at one rate and a junior at another, the client sees a single figure and the agency absorbs the mix internally.
Clients like it because a quote stops depending on who happens to be free. Agencies like it because it keeps the seniority mix private. The risk is that the mix drifts: a project sold on a blend that assumed mostly mid-level work, then delivered mostly by a director, loses money quietly.
Cost rate or bill rate
The phrase gets used for two different numbers, and confusing them is how an agency prices itself out of a margin. A blended cost rate is what an hour costs you: salary plus overhead, spread across the team. A blended bill rate is what the client pays. The gap between them is the margin, which is the second card above.
Agencies generally target 50 to 60% gross margin on delivered hours. Below 40% there is no room for the hours that never get billed, so one over-running project takes the quarter. Above 70% usually means the cost figures are missing something, most often overhead or non-billable time.
See the blend on real hours
AgencyKit tracks time against the client and puts the hours next to the fee, so the margin on this page becomes a number you measured rather than one you assumed.
Start a free trialFrequently asked questions
A blended rate is one hourly price charged for work delivered by people at different levels. Rather than billing a director, a mid-level and a junior at three separate rates, the client sees a single figure and the agency absorbs the seniority mix internally. It keeps quotes stable regardless of who is available that week.
Weight each person by the hours they actually contribute, then divide the total value by the total hours. So blended rate equals total value of hours worked divided by total hours worked. The common mistake is averaging the rates instead, which overstates the number whenever juniors do most of the work.
The cost rate is what an hour costs you once salary and overhead are counted. The bill rate is what the client pays. The gap between them is your margin. Both get called a blended rate, which is why an agency can quote a number that looks fine and still deliver at a loss.
Agencies generally target 50 to 60% gross margin on delivered hours. Under 40% leaves no room for the hours that never get billed, so a single over-running project takes the quarter. Over 70% usually means the cost side is missing overhead or non-billable time rather than that the business is exceptional.
Because the mix that was quoted is rarely the mix that delivers. A project sold assuming mostly mid-level work, then delivered mostly by a director because the mid-level person was busy, costs far more per hour than the quote assumed. Tracking time against the client is the only way to see it before renewal.
Usually yes, and only the blended figure. It is simpler to read than a rate card, it keeps your salary structure private, and it stops the conversation becoming about who did the work rather than what was delivered. Keep the per-level costs internal.