Effective Hourly Rate Calculator
See what you really earn per hour after scope creep and over-servicing, how much of your quoted rate you captured, and whether your rate covers its cost.
Free · Runs in your browser · Nothing is stored
How it is calculated
Formula: Effective hourly rate = fee earned / all hours actually worked
Your quoted rate is what you planned to earn per hour. Your effective rate is what you actually earned, found by dividing the fee by every hour you really spent on the work, billable or not. The gap between them, the realization rate, is the earliest sign that pricing or scope is leaking margin.
Keep the effective rate at roughly 2.5 to 3 times your fully loaded labor cost per hour, which corresponds to a 60 to 70% delivery margin, and hold realization at 85 to 90% or higher. Dividing by only invoiced hours hides over-servicing, so include the revisions and coordination time too.
Stop guessing your real rate
AgencyKit ties every tracked hour to the fee it earned, so your effective rate and realization show up per client automatically.
Start a free trialFrequently asked questions
Effective hourly rate is the revenue you actually keep per hour truly worked on an engagement, found by dividing the fee by every hour spent on it, billable or not. It reveals the real rate after scope creep and over-servicing, which is often far below the quoted rate.
Aim to hold realization, your effective rate as a share of your quoted rate, at about 85 to 90% or higher. Below roughly 85%, pricing or delivery is leaking, usually through unbilled revisions and over-servicing.
Keep your effective hourly rate at roughly 2.5 to 3 times your fully loaded cost per hour, which corresponds to a healthy 60 to 70% delivery margin. Below 2x cost, the work is barely profitable once overhead is added.