Hourly Rate Calculator
Calculate an hourly charge-out rate from your costs, billable hours and target margin.
Model Your Charge-Out Rate
Convert Gross Pay
Compare Billing Units
Work Out Available Billable Hours
Billable hours are time charged to a client under the engagement terms. Actual paid hours also cover leave and non-billable work, such as administration.
Annual paid hours = paid weeks × weekly hours. Available hours = (paid weeks − leave weeks) × weekly hours. Billable hours = available hours × utilisation.
The default 50 paid weeks at 40 hours produce 2,000 paid hours. Five leave weeks leave 1,800 available hours. At 75% utilisation, annual billable capacity is 1,350 hours.
Calculate Cost Recovery and Margin
Include salary or target income, employer costs and allocated practice overheads. Include each cost once. The calculator adds salary to additional costs and divides by billable hours.
Required rate = annual costs ÷ billable hours ÷ (1 − target margin). With $150,000 costs and 1,350 billable hours, cost recovery is $111.11 per hour. A 20% margin needs $138.89 per hour.
Margin uses revenue as its denominator. For $100 of costs, a 20% margin needs $125 revenue, leaving $25 profit. A 20% markup produces $120 revenue and a 16.67% margin.
Business Victoria’s margin and markup guide explains why margin divides profit by revenue and markup divides profit by cost.
Compare a Proposed Hourly Rate
At the default proposed rate of $150, 1,350 billable hours produce $202,500 revenue. After $150,000 costs, profit is $52,500 and margin is 25.93%.
Reducing utilisation to 60% gives 1,080 billable hours. Recovering the same costs at a 20% margin then needs $173.61 per hour. A zero proposed rate has no defined percentage margin.
The result is a cost model. It does not establish a market price, a reasonable fee or recoverable legal costs. Compare the assumptions with your engagement terms and actual collections.
Convert Salary and Billing Units
Gross hourly pay = annual salary ÷ paid weeks ÷ weekly hours. The inverse multiplies an entered hourly pay rate by those hours and weeks.
These conversions calculate gross pay before tax. The default $100,000 salary over 2,000 paid hours equals $50.00 per hour. An hourly rate of $50 produces a $100,000 annual salary.
At $150 per hour, seven minutes rounded up to six-minute units becomes 12 billed minutes and a $30 fee. A 10% write-off leaves $27.
Realised rate = fee after write-off ÷ recorded hours. In that example it is $231.43 per recorded hour because rounding increases billed time.
A zero recorded time has no defined realised rate. The table compares all three rounding rules for your billing-panel inputs.
| Rule | Units | Billed minutes | Fee after write-off |
|---|---|---|---|
| Round up | 2 | 12 | $27.00 |
| Nearest unit | 1 | 6 | $13.50 |
| Round down | 1 | 6 | $13.50 |
Calculate Billable Capacity
Leave removes time before utilisation is applied. Do not also include the same leave in your non-billable percentage. For unpaid weeks already excluded from paid weeks, enter no further deduction.
The capacity model assumes all available billable hours are recorded and charged. If time goes unrecorded, reduce the billable share to reflect that loss. The billing panel separately models a write-off on one recorded entry.
Use time records and collected fees to compare assumptions with actual results. Hourly rates and single-entry fees display to cents. Annual estimates show whole dollars. The model retains full precision internally.
Use the legal expense tracking tool to apply a selected rate to a matter-cost schedule.