Effective Hourly Rate Calculator

Introduction

The hourly rate on a quote is not always the rate you keep. Billed hours pay. Unpaid hours — revisions you do not invoice, sales and proposals, admin, bookkeeping — still take the week. Effective hourly rate is billed earnings divided by all of the hours you actually worked.

That is a different question from the rate that funds a year. The Freelance Hourly Rate Calculator starts from take-home income, expenses, and utilization, and asks what you should charge. This page starts from a rate you already quote and asks what you actually earned after unpaid work. It is also not client profitability. Profit still has to subtract costs; this calculator does not.

Use it when the published rate looks healthy and the week does not. The gap is a measurement, not a market average and not a recommendation to fire a client. This is a planning tool. It is not tax, accounting, legal, or financial advice.

How it works

Enter the hourly rate you quote or invoice. Enter the hours you actually bill in a typical week. Enter the unpaid hours in the same week: extra revisions, sales time, admin, and similar work that does not appear on an invoice.

Quoted weekly earnings are the quoted rate times billed hours. Total hours worked are billed hours plus unpaid hours. Effective hourly rate is those earnings divided by total hours. The quoted vs effective gap is the quoted rate minus the effective rate. Implied weekly earnings are the billed earnings — what invoiced hours bring in, not what every hour of the week paid.

If you priced a project instead of a week, divide the project fee by the hours you meant to bill to get a quoted hourly rate, then add the extra unpaid hours you actually worked. Look at the effective rate and the gap. Implied weekly earnings then means earnings for that project, not a calendar week.

If you do not yet have a living hourly rate, start with the Freelance Hourly Rate Calculator. If you are still assembling a fixed quote, the Freelance Project Rate Calculator builds a fee from estimated hours. Once a client is on the books with costs attached, the Client Profitability Calculator shows whether the engagement paid after expenses, not only after unpaid time.

The calculation

Quoted weekly earnings are quoted hourly rate times billed hours per week. Total hours worked are billed hours plus unpaid hours. Effective hourly rate is quoted weekly earnings divided by total hours worked. Quoted vs effective gap is quoted hourly rate minus effective hourly rate. Unpaid hours is the unpaid figure you entered. Implied weekly earnings is quoted weekly earnings.

If unpaid hours are zero, the effective rate equals the quoted rate and the gap is zero. If billed hours are zero and you still worked unpaid time, earnings are zero and the effective rate is zero — you worked without invoicing. If both billed and unpaid hours are zero, there is no rate to compute.

This calculator does not subtract expenses or tax. It does not convert a salary, and it does not tell you what clients will pay. A lower effective rate than the quote means unpaid time diluted the week. That can be a reason to bill extra rounds, cut unpaid sales time, raise the next quote, or leave a client as they are. The formula does not choose.

This calculator is a planning and estimation tool. It does not provide tax, accounting, legal, or financial advice. Actual earnings depend on the hours you include, how you invoice, and circumstances this page does not see.

Example

This is a worked example with sample figures. It is independent of the numbers you enter in the calculator above. It is not market pricing.

Suppose you quote $80 an hour, bill 25 hours in a week, and work 15 unpaid hours on revisions, sales, and admin.

Billed earnings are $2,000. Total hours worked are 40. The effective hourly rate is $50. The gap is $30 an hour. Unpaid hours are 15. Implied weekly earnings are $2,000.

$50 is what those 40 hours actually paid under these assumptions, not a recommended published rate and not a market average. The $80 figure is the quote you entered, not a promise that every client pays it.