Billable Hours Formula

Desired Annual Salary

+ Annual fixed costs (or overhead)

+ Desired Annual Profit

Divided by Annual billable hours

+ Hourly rate

This formula adds all the income you desire to make each year and divided by the number of hours one wishes to work yearly. This results in ones hourly rate.

Applies to:

• Service-based Business
• Freelancers

Service Rates What Are They?

Service rates are not only just a measure or value of ones time, they also need to cover ones overhead and yield ones profits as well

Explained Further:

• Desired Salary: How mush one would like to earn
• Fixed Costs: How much is spent on rent, utilities, office equipment, pc's, and other items of overhead?
• Desired Profit: A profit goal of 20% above salary and overhead fixed costs.
• Billable Hours: The fewer billable hours one estimates, the higher ones hourly rate will be; the more billable hours, the lower your hourly rate.

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