Everhour supports project budgets and billing workflows, while this page shows how hourly totals compare with fixed project pricing.
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This calculation answers whether a project earns more under hourly billing or a fixed quoted amount. It starts with approved billable time, the applicable billing rate for each role or task, and the flat fee promised to the client. The result shows the dollar gap between the two approaches, not whether the fee is fair by itself.
For service businesses, the comparison matters before quoting, during a scope change, and after delivery. If the billable-hours total exceeds the flat fee, the project absorbed unpaid time. If the flat fee exceeds the hourly value, the project produced a premium, assuming the client accepted the scope and the invoice terms were clear.
For hourly billing, multiply each approved billable hour category by its rate, then add the amounts. Compare that subtotal with the fixed fee. For example, a brand refresh includes 13 approved creative direction hours at $175 per hour and 21 approved production hours at $118 per hour. The hourly value is $4,753.
If the project was sold for a $5,100 flat fee, the flat-fee amount is $347 higher than the hourly value. With 34 total approved billable hours, the flat fee produces an effective billable rate of $150 per hour. That effective rate is useful when deciding whether future fixed-fee work needs a higher quote or tighter scope.
The common mistake is comparing the flat fee only with the original estimate. A better check compares the fee with approved billable time after delivery. A $5,100 quote based on 30 expected hours looks healthy at $170 per hour, but that changes once the actual approved time reaches 34 hours.
Scope changes also change the comparison. If the client adds deliverables, the new work needs a change order, a separate hourly bucket, or a revised fixed fee. Without that boundary, the flat fee silently absorbs the extra time, and the final invoice no longer reflects the actual labor required to finish the project.
A one-off calculation is enough when the project is finished, the approved hours are final, the rates are simple, and the flat fee is already known. It is also enough for a pre-quote check, where you only need to know whether the proposed fixed price covers the expected time at current billing rates.
A managed workflow is better when the project runs across weeks, includes approvals, uses recurring budgets, or has scope changes. Everhour Project Budgeting supports time and money budgets, recurring budget periods, alerts, budget protection, expense inclusion controls, multiple billing methods, and client-level budgets, so the comparison is tracked while work happens instead of reconstructed after delivery.
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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Add the approved billable value first: hours multiplied by the correct rate for each person, task, or role. Then subtract that subtotal from the flat fee. A positive result means the flat fee is higher than the hourly value. A negative result means the approved billable work exceeded the fixed price.
The effective rate shows the flat fee divided by the approved billable hours. If a $5,100 fixed project takes 34 approved billable hours, the effective rate is $150 per hour. Compare that figure with the rates you would have charged hourly to see whether the fixed quote protected margin.
Non-billable work should not increase the client invoice unless the contract says otherwise, but it should affect internal review. Track it separately from approved billable time. A flat-fee project can look profitable against billable hours while still consuming too much internal planning, rework, or administration time.
No. 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. billable-hours or flat-fee calculation needs a jurisdiction-specific tax input only when the service is taxable in that location.
For U.S. lawyers, ABA Model Rule 1.5 requires the scope of representation and the basis or rate of fees and expenses to be communicated in writing for new client-lawyer relationships, subject to the rule's limited low-cost exception. That written basis matters whether the matter is hourly, flat fee, or mixed.
Everhour Project Budgeting lets teams set time or money budgets, use recurring budget periods, and receive alerts when spending reaches defined thresholds. That gives a live view of whether a fixed-fee project is approaching its limit before the approved time exceeds the quote.
Everhour Billing & Invoicing turns tracked billable time and expenses into invoices while excluding non-billable work. Invoice data can be grouped by project, task, person, or date, so the client-facing bill matches the billing structure used for the project.
Set time and money budgets before work starts, then track budget usage as hours are logged. Everhour Project Budgeting keeps fixed-fee work tied to limits, alerts, and billing decisions.
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