Hourly rate builder

Work it out

How the answer is worked out

Yearly amount to cover = yearly costs plus the pay wanted for the year.

Hourly figure = the yearly amount to cover divided by the billable hours in the year.

What the sources say

On the same topic, BDC's pricing steps separate direct costs, which include direct labour costs of providing a service, from overhead. It describes overhead as the costs of running a business and going to market whatever the sales volume, typically called fixed costs, and lists office staff salaries and benefits, marketing and advertising, rent or mortgage and property taxes, depreciation on office equipment, and insurance and professional fees as examples. It describes a markup as the amount added to the cost of goods sold or cost of sales to find the price of a product or service.

On the same topic, BDC's break-even entry says a service business can count the hours it sells in place of units.

University of Missouri Extension's break-even publication works labor cost per unit as hours multiplied by the hourly wage rate, and describes the cost of running equipment per hour as the sum of hourly depreciation, repair and operating costs.

None of those pages prints an hourly-rate sum, so the two lines above are plain arithmetic on the typed numbers. The page does not sort costs into groups, and it holds no cost list, pay figure, hours figure or typical rate. What counts as a cost, and how many hours are billable, are whatever is typed.

Arithmetic only. The answer is only as good as the numbers entered. It is not a plan or a safe working load for any job.

Work it out

How the answer is worked out

What the sources say

Sources