Freelance business
Effective hourly rate of a project
Divide a project fee by every hour it took, including proposals, admin and revisions, to see what you really earned per hour.
Effective rate = (fee - direct costs) / (billable hours + unbillable hours). A $3,000 project that took 30 hours of work plus 12 hours of proposals, admin and extra revisions pays $71.43 an hour, not the $100 it looks like on paper. At a $100 target it needed a $4,200 fee.
Your numbers
Result
Worked example
Fee $3,000, 30 hours of work looks like $100 an hour. Add 12 hours of proposals, admin and unpaid revisions and the project took 42 hours: $3,000 / 42 = $71.43 an hour, 28.6% less. To earn $100 an hour on all 42 hours the fee needed to be $4,200, $1,200 more.
How it works
Quoting on work hours alone ignores the time around the work. Counting it shows which clients and project types pay. Track time against the project for a few jobs before trusting a figure.
If the effective rate keeps coming in below target, either add unbillable time to your rate (see the hourly rate and billable hours calculators) or tighten scope and revision limits.
Sources and basis (checked 2026-10-08): arithmetic on the numbers you enter. No published rates, tax rules or benchmarks are built in; any figure described as a rule of thumb is labelled as one. This is a planning estimate, not financial, tax or legal advice.
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FAQ
What is an effective hourly rate?
What a project actually pays for every hour it took, including time you could not bill. $3,000 over 42 hours is $71.43.
What counts as unbillable time?
Proposals, discovery calls, invoicing, chasing payment, project admin and revisions beyond what you quoted.
How do I fix a low effective rate?
Raise the fee, limit revisions in the contract, or build the unbillable time into your hourly rate.
Should direct costs be included?
Enter costs paid specifically for this project, such as stock images or a subcontractor. They are taken off the fee before dividing.