Agency billing mixes retainers, projects, and hourly work. Everhour keeps cost and billable rates separated by project.
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A creative agency billable-hours calculation answers how much approved client work is worth before tax, discounts, write-downs, or retainer adjustments. The basic question is not just "how many hours were worked?" It is "which tracked hours are billable under the client agreement, and which rate applies to each person, department, task, day, or blended team unit?"
That distinction matters because creative agencies commonly sell work through a mix of time and materials, fixed-bid projects, and retainers. A calculator gives you a clean starting number for scope reviews, invoice checks, and project profitability. It also helps compare quoted retainers or fixed fees against the actual labor time consumed by strategy, design, copy, development, account management, and revisions.
For time-based agency compensation, the fee is `hours_or_days_worked × rate`. Rates may be set by title, level, department, person, task, day, or one blended team rate. If the client agreement uses separate role rates, do not average them unless the contract uses a blended rate. Multiply each approved billable bucket by its own rate, then add the results.
For example, a campaign sprint includes 18 approved designer hours at $140 per hour, 7 strategist hours at $185 per hour, and 12 developer hours at $160 per hour. The billable value is $2,520 + $1,295 + $1,920 = $5,735 before any applicable state or local tax, retainer credit, write-down, or invoice discount.
Creative agencies often track more client-related time than they invoice. AMI's agency benchmark uses 1,920 annual available hours per full-time employee, with 75% targeted to billable tasks and at least 60% actually billed to clients. That means 1,440 billable-task hours and 1,152 billed hours per FTE, implying about 80% of billable-task time reaches client billing.
Use that gap as a management signal, not as a forced invoice rule. Time spent on internal administration, business development, training, and other agency operations belongs outside billable totals. Client work that is written down because of scope creep, inefficient rework, or a fixed-fee cap should stay visible, but it should not inflate the amount billed if the contract does not allow it.
A one-off calculator is enough when you need to check a single invoice, price a small time-and-materials request, or estimate whether a fixed-fee job still makes sense. It works best when the inputs are already approved: billable hours, role rates, non-billable exclusions, tax treatment, and any write-downs or retainer credits.
A managed workflow is better when the agency has recurring retainers, changing rates, multiple departments, or frequent client revisions. Everhour can keep cost and billable rates separate, apply default per-person rates or per-project overrides, preserve dated rate history, and price billable work by project, member, or task before billing moves forward.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Creative agencies calculate billable hours by adding approved client work that is chargeable under the agreement, then multiplying those hours by the correct rate. The rate may be tied to a person, department, task, day, or blended team structure. Non-billable admin, business development, training, and excluded rework should stay out of the billable amount.
Retainers should use billable hours when the contract is based on a time allowance, a monthly scope cap, or a true-up against actual work. If the retainer is a fixed commercial fee, billable hours still help check margin and scope pressure, but they do not automatically increase the invoice unless the agreement allows overage billing.
AMI's planning benchmark starts with 1,920 annual available hours per full-time employee, targets 75% of available hours on billable tasks, and targets at least 60% of available hours actually billed to clients. For one FTE, that equals 1,440 billable-task hours and 1,152 billed hours per year.
There is no universal creative agency rounding increment in the cited agency compensation guidance. Agency time-based pricing may be measured in hours, days, or FTE equivalents, so smaller increments such as 6 minutes or 15 minutes are firm policy or contract terms. Apply the client-approved rounding rule before calculating the billable value.
The United States has no federal VAT/GST or national sales-tax rate for billed professional time. Tax treatment is state and local. A U.S. agency should calculate the pre-tax billable amount first, then apply a jurisdiction-specific tax input only when the service is taxable under the relevant state or local rule.
Everhour separates internal cost rates from client-facing billable rates, with default per-person rates and per-project overrides. Agencies can price billable work by project, member, or custom task rate, and dated rate changes keep older reports tied to the rate that applied when the work happened.
Move agency billing from one-off math to dated cost and billable rates by person, project, or task. Everhour keeps rate history intact as client scopes change.
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