Agency & Pricing
Agency Hourly Rate Calculator
The rate that keeps an agency alive is not the rate the market anecdotally pays, it is the one your cost base demands. This works backwards from fully loaded cost, real billable hours, and the margin you actually need.
Result
FormulaMinimum rate = fully loaded cost ÷ billable hours ÷ (1 - target margin). Fully loaded cost = salary × (1 + overhead rate).
Worked example
An $85,000 salary with 45 percent overhead is $123,250 fully loaded. At 1,880 working hours and 65 percent utilization that is 1,222 billable hours, a $101 break-even rate. To hold a 55 percent gross margin you must bill $224 an hour.
What to watch for
The number that surprises people is utilization. Nobody bills 100 percent of their week, and 65 to 75 percent is realistic for delivery staff once you subtract internal meetings, sales support, admin, and training.
Overhead at 40 to 60 percent of salary is a common range once you count rent, software, management, finance, recruitment, and non-billable staff. Undercount it and your margin evaporates without anyone being able to point at why.
This is a floor, not a price. What you charge should reflect the value and the risk you carry, and the floor exists so you know when a deal is quietly costing you money.
Frequently asked questions
Should I share my hourly rate with clients?
I prefer not to lead with it. Hourly rates invite a negotiation about efficiency rather than outcomes. Use the rate internally to price scopes and retainers, and quote the client a scope with a price.
What utilization should I target?
For hands-on delivery staff, 70 to 75 percent is a healthy ceiling. Above 85 percent people burn out and quality drops. Leaders and strategists should be lower, because their non-billable time is what generates future revenue.
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This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.