Get early access
Free tool · No signup

Effective Hourly Rate Calculator

The rate you quoted and the rate you were paid are rarely the same number. This works out the second one, after every hour and every cost.

Your numbers

Everything stays in your browser. Results update as you type.

What the project paid

Changes how results are displayed. No conversion is applied.

The total the client paid, including any approved change orders.

What the estimate said. Used to work out the rate the project looked like on paper.

Where the time actually went

Include everything, including the hours you would never have put on an invoice.

Every round, including the ones you did not push back on.

Count the preparation and the follow-up notes, not just the call.

Briefing, file handover, status updates, invoicing, chasing payment.

The hours it took to win this project in the first place.

The two weeks of small requests that arrive after you thought it was finished.

What came off the top

Licences, stock assets, subcontractors, hosting, travel.

Card processing, marketplace commission, currency conversion.

Shows what this project would have had to pay to hit it.

Your actual effective hourly rate
$76.13/hr

$5,100.50 net, across 67h of real time.

You quoted this project as if it would pay $110.00/hr. After 17h more than estimated and $399.50 of fees and costs, it actually paid $76.13/hr — down 30.8%.

Estimated hours
50h
Actual hours
67h
Extra hours
17h
Net revenue
$5,100.50

Where the hours went

  • Delivery44h
  • Revisions9h
  • Meetings and calls6h
  • Project admin3h
  • Proposal and sales3h
  • Support after delivery2h
Project revenue$5,500
Payment fees (2.9%)−$159.50
External expenses−$240
Net project revenue$5,100.50
Gap to $100.00/hrThis project would have needed $6,700 to hit your target$1,599.50

Watch: The gap between the quoted rate and the real one is not a verdict on the project. It is the number to price the next one with.

What this calculator does

It works out what a finished project actually paid per hour, once every hour it consumed and every cost it carried are counted.

The rate on the estimate is revenue divided by the hours you hoped it would take. The effective rate is net revenue divided by the hours it really took — including the revision round you did not charge for, the calls, the invoicing, the proposal that won the work and the fortnight of small fixes afterwards. The two are rarely close.

How the calculation works

actualHours = delivery + revisions + meetings + admin
+ sales + support + other
fees = projectRevenue × feePercent
netRevenue = projectRevenue − fees − externalExpenses
effectiveRate = netRevenue ÷ actualHours
quotedRate = projectRevenue ÷ quotedHours
extraHours = max(0, actualHours − quotedHours)
revenueGap = max(0, actualHours × targetRate − netRevenue)

Net revenue is allowed to be negative. A project that cost more in fees and expenses than it earned is a real outcome, and rounding it up to zero would hide the exact case this page exists to find.

A worked example

Starting from
Project revenue
$5,500
Quoted hours
50h
Delivery / revisions / meetings
44 / 9 / 6 h
Admin / sales / support
3 / 3 / 2 h
External expenses
$240
Payment fee
2.9%
  1. 1
    Actual hours
    44 + 9 + 6 + 3 + 3 + 2 = 67h
  2. 2
    Quoted rate
    5,500 ÷ 50 = $110.00/hr
  3. 3
    Fees
    5,500 × 0.029 = $159.50
  4. 4
    Net revenue
    5,500 − 159.50 − 240 = $5,100.50
  5. 5
    Effective rate
    5,100.50 ÷ 67 = $76.13/hr
  6. 6
    Against a $100 target
    67 × 100 − 5,100.50 = $1,599.50 short

Quoted as a $110/hour project, delivered as a $76/hour one. Seventeen extra hours and $400 of costs did that — and neither was visible until the project was over.

Common mistakes

Only counting delivery time

In the example, delivery is 44 of 67 hours. Measuring only delivery gives $116/hour, which looks like a success and is off by a third.

Leaving out the proposal

The hours spent winning the work are part of what the work cost. Including them is also the only way to see that a client who takes three pitches per project is more expensive than their invoices suggest.

Forgetting post-delivery support

The fortnight of “quick questions” after handover is unbilled time on a project the books have already closed.

Reading the result as a judgement

A low effective rate is information, not a failure. It tells you which kinds of work, which clients and which estimates cost you money — which is exactly what you need before quoting the next one.

When to recalculate

At the end of every project of any size, while you can still remember where the hours went. After three or four, patterns appear: a client type that always overruns, a deliverable you consistently under-estimate, a package that has never been profitable. Feed that back into the Project Pricing Calculator as a larger contingency or a higher hourly value.

Where Freshlance fits

Reconstructing this from memory two months later is guesswork, and the guess is always flattering. Freshlance time tracking records the hours against the project as they happen and keeps them next to the project’s value, so the effective rate is available while the work is still live — which is the only point at which you can do anything about it.

Questions

What counts as project time?
Anything that would not have happened if you had turned the project down. Delivery, revisions, meetings, the proposal, the invoicing, the support afterwards. If the project caused the hour, the hour belongs here.
Should I include the proposal time for projects I lost?
Not in this calculation — it measures one project. Losing pitches is a real cost, but it belongs in your rate as part of the non-billable sales hours, which is what the Billable Hours Calculator handles.
My effective rate is much lower than my hourly rate. Is that normal?
On fixed-fee work, a gap of 20–30% is common the first time anyone measures it. A gap above 50% usually points at one specific thing: unbounded revisions, a scope change that was absorbed, or an estimate that only counted delivery.
How do I improve the effective rate on my next project?
Three changes do most of the work: cap the revision rounds in writing, price meetings and project admin into the estimate rather than treating them as overhead, and put a number on scope changes at the moment they are requested rather than after.
Does this work for hourly projects too?
Yes, and it is often more revealing there. Hourly work still carries unbilled meetings, admin, the proposal and the support tail — so the effective rate lands below the rate on the invoice even when every delivery hour was paid.

Note. The result is only as accurate as the hours you can remember. It is a look backwards at one project, not a forecast.

Take the answer into a document

The calculator gives you the number. These are the free, editable files that put it in front of a client — no signup, Microsoft and OpenDocument formats.

Freelance Project Profitability Spreadsheet

Available formats: XLSXODSPDF

What a project actually paid: contract value including changes, every hour by category, costs, net revenue, effective hourly rate and margin.

Related calculators

Project Pricing Calculator

Turn estimated hours, revisions, expenses, risk and fees into a defensible project price.

Freelance Rate Calculator

Calculate a sustainable hourly rate based on your income target, business expenses, available working time and non-billable hours.

Billable Hours Calculator

See how many client hours you can realistically sell after admin, sales, meetings, time off and buffer.

All free tools →