Services
Your floor hourly rate, and the one to charge
Your real hourly cost is your total annual costs, including your own pay, divided by the hours you actually bill. Not by the hours you work. Add your unpaid invoices and fees: that's your floor rate.
The formula
Billable hours = people × weeks × hours per week × share actually billed
Real hourly cost = total annual costs ÷ billable hours
Floor rate = real hourly cost ÷ (1 − unpaid invoices − fees)
Recommended rate excl. VAT = real hourly cost ÷ (1 − target margin)
Real hourly cost = total annual costs ÷ billable hours
Floor rate = real hourly cost ÷ (1 − unpaid invoices − fees)
Recommended rate excl. VAT = real hourly cost ÷ (1 − target margin)
Worked example
2 people, 44 weeks, 40 h, 62% billed → 2,182 billable hours. Costs €144,100 (owner €69,600 incl. social charges, employee €38,000, running costs €36,500). Real hourly cost €66.03 excl. VAT. With 2% unpaid invoices and 1% fees, floor rate €68.07 excl. VAT/h. At a 20% margin: €82.54 excl. VAT/h.
Mistakes that cost you
- Dividing by all the hours worked: admin, prospecting and holidays aren't paid for by clients.
- Leaving your own pay out of your costs.
- Confusing what your pay costs you with what you take home net.
What social contribution rate on my pay?
The one for your status and your country: ask your accountant or your social security fund. The tool doesn't make it up.
Your situation doesn't look like the example? Do the full calculation with your own figures: it's free, with no sign-up.
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