All calculators

Calculator · Freelance Rates

Effective Hourly Rate Calculator

Compare collected revenue and direct-cost contribution per total work hour, including admin and revisions that never appear on an invoice.

By PriceAndProfit Editorial Updated

$
$
hours
hours

Fill in the fields: the result appears under the form, with the formula below it.

Clear

Formula and cost boundary

Effective contribution per hour = (collected service revenue − direct costs) ÷ (delivery + other work hours)

Use hours and receipts for the same finished work or the same clearly defined cohort. A late invoice can distort a period-only cash measure. Total hours must be positive, but either component may be zero. The contribution rate excludes fixed business overhead and owner taxes; it is not a wage, statutory pay rate or take-home income. Negative results remain visible.

Worked example: Account for unbilled work

The following inputs are hypothetical values for checking the calculation. They are not recommended prices, wages, margins or platform charges. Keep the units and period shown in each label when replacing them with your own records.

Inputs for this worked example
InputExample value
Collected service revenue $4,000
Direct cash costs of this work $400
Delivery hours 30 hours
Admin, sales and revision hours 10 hours
Outputs from the displayed inputs
ResultCalculated value
Contribution per total work hour $90/hour
Collected revenue per total hour $100/hour
Collected revenue less direct costs $3,600

Using the result

Save the input set alongside the source date of each quote or cost record. Review the cost boundary before comparing this result with another report: a contribution measure may exclude overhead, and a cash measure follows payment dates. Display rounding does not change the underlying assumptions. Recalculate when an input changes; the tool does not predict future sales or collections.

Are any rates supplied automatically?

No. Numeric fields are your inputs. Example values demonstrate arithmetic only. Check your contracts and records for the amounts that apply to your business.

Why might a result be unavailable or negative?

A missing denominator or inconsistent inputs can make the calculation undefined. Those combinations are rejected or labeled explicitly. A valid negative result remains visible because it may identify a loss or cash shortfall.

Method reference: OpenStax: Operating Budgets. Checked October 22, 2026. Capacity, sales and delivery-cost budgets; no market rate assumptions.

Related calculators & guides