Everhour tracks billable work by project and task, while your rate calculation sets the price before invoicing begins.
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A billing rate calculation answers the hourly price needed to reach a revenue target from a defined number of billable hours. It is useful when you know the amount that must be billed, but not the hourly rate that makes the math work. For a project, that target is the approved fee. For a solo annual plan, it is the billable revenue you need from client work.
The result is not the same as profit. A billing rate is the amount charged per billable hour before cost, collection, discounts, write-downs, and jurisdiction-specific taxes. In the United States, billable-hour totals are normally denominated in U.S. dollars, and there is no federal VAT/GST or national sales-tax rate for billed professional time.
The core formula is: required billing rate = target billable amount / billable hours. If a consultant needs $84,000 in billable revenue from 700 approved billable hours, the required billing rate is $120 per hour. At that rate, a 34-hour client project produces $4,080 before any applicable state or local tax.
Use approved billable hours, not total worked hours, as the denominator. Non-billable admin work, sales calls, internal meetings, training, and written-off time change utilization and realization, but they do not belong in the basic rate denominator unless the goal is an effective rate across all work. Mixing those categories makes the client-facing hourly price look lower than it needs to be.
The main decision is whether the calculated rate is meant to recover a fixed target or quote a competitive client price. A fixed target uses the revenue-needed formula. A client quote uses expected billable hours multiplied by the proposed rate, then checks whether write-downs or excluded tasks reduce the amount actually billed.
Rounding also matters. If time is billed in 0.1-hour increments, 6 minutes equals 0.1 billable hour. If time is billed in 15-minute increments, the same 6 minutes becomes 0.25 billable hour if the policy rounds up. Apply the billing increment before multiplying by the rate, and document the basis or rate in writing where professional rules or client contracts require it.
A U.S. billing rate calculation should keep tax separate from the hourly price unless the contract says the rate is tax-inclusive. The United States has no federal VAT/GST, and sales tax treatment is state and local. Some services are not taxed, while taxable services need the correct jurisdiction-specific tax input.
For example, Texas taxes taxable services at a 6.25% state sales and use tax rate, with local jurisdictions able to add up to 2% for a maximum combined rate of 8.25%. Hawaii applies general excise tax to business activities instead of sales tax, and New Mexico gross receipts tax includes performing services in New Mexico with rates that vary by business location.
A one-off calculator is enough when you need a quick quote check, a fee conversion, or a pre-invoice sanity check. Enter the target amount, approved billable hours, billing increment, and any applicable state or local tax input. The result gives a clean hourly rate or invoice subtotal for that specific scenario.
A managed workflow is better when multiple people, rates, tasks, and approvals affect the billed amount. Everhour supports billable and non-billable time through project billing status, task-level non-billable controls, custom task rates, member-rate exceptions, and admin reports for billable time, non-billable time, billable amount, and cost.
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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Divide the target billable amount by the number of approved billable hours. A $60,000 target over 500 billable hours requires a $120 hourly billing rate. Use billable hours only in this formula. Total worked hours belong in utilization or effective-rate analysis, not in the client-facing billing rate denominator.
A billing rate is the stated hourly price charged for billable work. An effective rate measures what you actually earned per hour after write-downs, non-billable work, or unpaid time are included. If $4,800 is billed from 40 approved billable hours, the billing rate is $120. If 50 total hours were worked, the effective rate across all work is $96.
Keep tax separate unless the agreement states that the billing rate includes tax. The United States has no federal VAT/GST or national sales-tax rate for billed professional time. Tax treatment is state and local, so a U.S. invoice needs a jurisdiction-specific tax input only when the billed service is taxable.
Use approved billable hours for the client-facing billing rate. Exclude non-billable hours, internal work, and time written off before billing. Include those hours only when calculating utilization, realization, or an effective billing rate across all work. The denominator must match the question the calculation is answering.
Rounding changes the billable hours before multiplication. A 10-minute entry is 0.2 hour under 0.1-hour billing, but 0.25 hour under 15-minute billing if the policy rounds up. That difference affects the invoice amount even when the hourly billing rate stays the same.
Everhour supports billable and non-billable time through project billing status, task-level non-billable controls, custom task rates, member-rate exceptions, and admin reports with billable time, non-billable time, billable amount, and cost. That keeps rate-based billing tied to the right project, task, and person.
Track approved billable work, mark excluded tasks correctly, and review billable amounts before invoicing. Everhour keeps the billing-rate workflow connected to time entries, approvals, and reports.
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