# Billing Rate Calculator

\$
hrs/year
%

## Find Out How to Price Your Service With the Help of Calcopolis

You're not alone. Pricing is a tricky business—and it's one that can make or break your company. So, how do you know when to charge more and when to charge less?

Calcopolis (our billing rate calculator) can help! With just a few clicks, you can quickly and easily determine how to price your service. The best part? It's free!

• What is the billing rate

• How to calculate the hourly billing rate

• How to price the work of your employees

To analyze this topic from different angle you may use also our billable hours calculator. It help you determine the total amount you should charge your customer for your service.

## What Is the Billing Rate?

The billing rate is the price you charge your client for your services, as well as how you report that price. Note that the billing rate is not the same as the rate of pay for an employee or contractor but rather your rate for billing clients.

The billing rate can vary widely depending on many factors, including industry and location. For example, attorneys typically have higher billing rates than graphic designers because they require more education and experience to practice their profession.

However, lawyers in large cities are likely to have higher billing rates than those in small towns because of the cost of living in large cities.

## How to Calculate the Hourly Billing Rate?

Calculating your hourly billing rate is the first step to assessing the profitability of your business. To figure it out, you need to:

• Figure out the annual salary of your employee

• Work out their work capacity (the number of hours they work per year)

• Calculate the markup

Once you've gathered all this data, apply it to this formula:

Bill rate = (annual salary / capacity) × (markup/100%+1)

## How to Price the Work of Your Employees?

When you run a business, there are many factors to take into consideration when deciding how much to charge for your services.

You’ll have to cover your costs, but you also want to stay competitive in the marketplace and make enough money to pay all the people who work for you.

For some businesses, this can be a real challenge. So, how do you figure out what price your services should be?

Essentially, the hourly rate of your employee's work should:

### 1. Cover Their Hourly Wage (Including All Taxes, Social Security, Etc.)

The first thing to consider is your employees' hourly wage. The hourly wage is what it costs you as an employer to pay someone for their time.

This may also include any benefits or perks like health insurance or paid time off (PTO). Plus, it has to cover any taxes that might be due on that salary as well.

### 2. Provide Markup High Enough to Cover Other Business Expenses (Both Fixed and Variable Costs): Office, Accounting, Marketing, Etc.,

Next up are the overhead expenses that aren't directly related to your core operations but are necessary for running a business.

For example, some typical business expenses include office space rental, accounting services, or marketing costs such as ads or trade shows.

These will vary based on factors like location and industry type but can add up quickly!

Make sure your employee's salary covers this cost in full so that you don't have to dip into profits later on when things get tight financially.

### 3. Provide Room for Your Profit

When deciding how much to pay your employees, you need to ensure that the hourly rate is high enough for your business to be profitable.

This means that when you factor in the cost of benefits and other expenses, you still end up making a profit.

If you don't make enough money to cover expenses and reinvest in new equipment or supplies for the next year, then it's time to rethink your business idea.

### 4. Include Margin for Unexpected Costs

Since you never know what might come up when you're working on a project, it's important to build a little extra into the price of your services.

For example, if you have a leaky pipe in the office, it’ll cost money and may take time away from your other projects.

You may also have to pay for replacement labor and do some extra hiring or training if one of your employees gets sick and has to miss a few days of work!

That's why our calculator calculates the hourly wage of your employee and allows you to put your desired markup to cover all these extra expenses.

## Summary

After you determine the billing rate you should verify it against the total salaries you are about to pay your employees. You can do this using our gross salary calculator it lets you calculate the total salary including extra payment for overtime.

### Authors

Created by Lucas Krysiak on 2022-11-17 16:05:32 | Last review by Mike Kozminsky on 2022-11-29 18:02:15