Small-business finance
Service business hourly rate
Recover annual overhead and owner compensation across billable hours.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
(overhead+compensation+profit target)/billable hours.
Compensation and profit are separate targets. Billable hours exclude unbilled administration and leave. No payroll compliance or tax calculation.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Annual overhead (selected currency): Use matching records or a clearly identified owner assumption for annual overhead, in the displayed unit and the stated row/period scope.
- Annual owner compensation target (selected currency): Owner-chosen annual pre-tax compensation target, separate from additional business profit.
- Annual additional profit target (selected currency): Explicit owner-supplied assumption for annual additional profit target. Label it as a scenario and compare alternatives; do not present it as a forecast.
- Annual billable hours (hours/year): Calendar working weeks × productive hours/week × explicit billable share.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Required hourly billing rate is $100.00 for the illustrative inputs below.
Example inputs
- Annual overhead: $30,000.00
- Annual owner compensation target: $60,000.00
- Annual additional profit target: $10,000.00
- Annual billable hours: 1,000.00 hours/year
- Required hourly billing rate
- $100.00
- Annual revenue target
- $100,000.00
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Recover annual overhead and owner compensation across billable hours.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.