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Effective Hourly

Your rate is only the hours you bill. Count the admin, sales, and ops hours nobody pays for — and see what you actually earn per hour worked.

Your week
what you charge
$/hr
per week
hrs
admin · sales · ops
hrs
per year
wks

Note: effective = nominal × billable ÷ (billable + unbilled). A utilization view — it doesn’t net out taxes or expenses.

Effective hourly60% billable
$72/ hr worked
Your $120/hr rate is really $72/hr once unpaid hours are counted — a 40% haircut.
Rate reality
Nominal
$120
Effective
$72
Where the week goes40 hrs/wk
24h
16h
Billable 24h · 60%Unbilled 16h · 40%

Two ways to lift the effective rate without longer days: raise the nominal rate, or convert unbilled hours into billable ones (productize, templatize, or delegate the admin).

Utilization
60%
billable / total
Billed hours
1,152
per year
Annual revenue
$138K
at this rate
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How it’s calculated

Effective hourly = total income ÷ total hours actually worked, including the unbilled ones: admin, invoicing, sales calls, proposals, revisions, and scope creep. Your billed rate is what you charge; your effective rate is what you earn. We also show utilization — billable hours as a share of all hours worked.

effective rate = (rate × billable hours) ÷ (billable + unbilled hours)
utilization = billable ÷ (billable + unbilled)

Worked example

Billing $120/hour for 25 hours a week — plus 15 unbilled hours of admin, sales, and revisions.

  • Total hours worked: 40/week, utilization 62.5%
  • Effective rate: $75/hour — not $120

What’s a good number?

A healthy freelance practice keeps the effective rate at 60–75% of the billed rate. Below 50% usually signals too much unbilled service, underscoped projects, or clients who demand free work.

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