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Billable Rate Calculator

Harvest offers powerful tools to manage and track billable rates, ensuring businesses cover costs and achieve profitability. Try it free for 30 days.

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What should you charge per hour?

Most freelancers and consultants dramatically undercharge. This calculator accounts for what most people miss: non-billable time, taxes, and overhead.

$
Accounting for vacation, holidays, sick days
60%
Most freelancers can bill 50-70% of their time. The rest goes to admin, marketing, proposals, and learning.
$
Software, insurance, equipment, accounting, taxes beyond income tax, etc.
Your break-even rate $0
Recommended rate (+20% buffer) $0
Billable hours per week 0h
Equivalent daily rate $0

Start tracking your billable hours

Walk through the entire flow below. Start a timer, check your reports, and create a real invoice — all in three clicks.

Go ahead — start tracking!

One click and you're timing. Try it right here: start a timer, add an entry, edit the details. This is exactly how it feels in Harvest.

  • One-click timer from browser, desktop & mobile
  • Works inside Jira, Asana, Trello, GitHub & 50+ tools
  • Duration or start/end — your call
  • Day, week & calendar views to stay on top of it all
  • Friendly reminders so no hour gets left behind
Acme Corp
Website Redesign
Homepage layout revisions
1:24:09
Content Strategy
Blog calendar planning
1:30:00
SEO Audit
Technical audit report
0:45:00
Brand Guidelines
Color system documentation
2:15:00
Logo Concepts
Initial sketches round 1
1:00:00
Today's total 6:54:09

Understanding Billable Rates: The Foundation of Profitability

A billable rate is the hourly fee charged to clients for services provided, crucial for covering operational costs and ensuring long-term profitability. Understanding the nuances of billable rates, such as the difference between employee hourly rates and actual cost per hour (ACPH), is key. The ACPH includes salaries, benefits, and overhead costs like rent and utilities. Typically, professionals aim to achieve 1,200 to 1,600 billable hours annually. By accurately calculating these rates, businesses can make informed decisions that directly impact their financial health.

One common approach involves using a profit multiplier, which ranges from 2.0x to 4.0x, depending on industry and service type. For example, law firms have seen senior partners charge as much as $2,100 per hour. Thus, setting a competitive billable rate is essential for maintaining a healthy delivery margin, generally recommended at 70% to cover costs and generate profit. This ensures that all expenses are covered while also achieving desired profit targets.

Calculating Your Billable Rate: A Step-by-Step Guide

Calculating an accurate billable rate involves several steps that ensure all costs are covered while achieving desired profit margins. First, calculate your total annual costs, including salaries, benefits, and overhead expenses. Next, estimate the realistic billable hours available per year, typically between 1,200 and 1,600 hours, after accounting for non-billable tasks and time off. This is crucial to avoid underestimating billable time, which can result in a loss of up to 10% in potential revenue.

After determining these figures, set a target profit margin. Common targets range from 20% to 25%. Finally, use one of the calculation methods to determine your hourly billable rate: divide total costs by billable hours and add your profit margin, or use a multiplier method like 4x the employee's salary divided by work hours. Regularly reviewing your rates ensures they remain competitive and profitable in changing economic conditions.

Optimizing Billable Rates with Harvest

Maximizing profitability requires effective management of billable rates, and Harvest offers robust solutions for this. Although Harvest does not directly calculate break-even points, it excels in managing billable rates across projects. With its detailed reporting capabilities, you can track both billable and non-billable hours, ensuring accurate time logging critical to profitability. This is especially important as 80% of timesheets typically contain errors, potentially impacting revenue.

Harvest integrates seamlessly with tools like QuickBooks and Xero, allowing for smooth financial management and invoicing processes. By leveraging these integrations, businesses can streamline operations, keeping a closer eye on their financial health. Moreover, Harvest's comprehensive expense tracking and project budgeting features offer alerts when approaching limits, helping prevent overspending and ensuring projects remain profitable. With a free 30-day trial, Harvest provides an opportunity to explore these capabilities risk-free.

Leveraging Time Tracking to Enhance Rate Calculation

Accurate time tracking is essential for refining your billable rate calculations. Harvest provides one-click timers and manual entry options, making it easy to log time accurately. This is crucial as inaccurate time estimates can lead to a 15-20% loss in billable income. By capturing all billable and non-billable hours, businesses can ensure their rates reflect actual work done, preventing undercharging clients.

Regularly monitoring your utilization rate—calculated as billable hours divided by total hours worked—can provide insights into productivity and help identify areas needing improvement. If your utilization rate falls below the recommended 60-70%, it may indicate excessive time spent on non-billable activities. By utilizing Harvest’s time tracking capabilities, businesses can optimize their operations, ensuring that both billable rates and utilization rates contribute positively to the bottom line.

Calculate Billable Rates with Harvest

Discover how Harvest tracks and manages billable rates. Explore project budgeting and time tracking with a free 30-day trial.

Screenshot of Harvest's billable rate tracking feature.

Billable Rate Calculator FAQs

  • A billable rate is the hourly fee charged to clients for services provided, critical for covering operational costs and ensuring profitability. Setting an accurate billable rate helps maintain a healthy delivery margin, generally recommended at 70%.

  • To calculate your billable rate, sum all annual costs, estimate billable hours (1,200 to 1,600 annually), and set a profit margin. Use methods like cost-plus-profit or a multiplier to determine the hourly rate.

  • Non-billable hours include tasks like training, meetings, and admin work. These hours reduce the time available for client work, impacting your billable rate. Accurately tracking them ensures proper rate calculation.

  • Harvest manages billable rates by offering detailed reporting and time tracking capabilities. It integrates with financial tools, providing insights into both billable and non-billable hours for accurate rate management.

  • The employee hourly rate is what an employee earns per hour, while the billable rate is what clients are charged for those services. The billable rate includes additional costs like overhead and profit margins.

  • Optimize your billable rates with Harvest by accurately tracking all working hours, regularly reviewing rates, and managing project budgets. Harvest's integrations and reports offer comprehensive insights for better rate management.

  • Yes, industries like law have unique rate considerations. High-stakes legal work can command rates over $2,000 per hour. Knowing your industry's benchmarks helps set competitive and profitable rates.

  • Regular reviews of your billable rates ensure competitiveness and profitability. Depending on your business volume, consider weekly, monthly, or quarterly reviews to adapt to market changes and economic factors.