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Insights: Average revenue per hour

This report provides insights into the average realized hourly rate.

Mark Poos avatar
Written by Mark Poos
Updated this week

Average Realized Hourly Rate

The report allows you to view the realized hourly rate (also known as the "effective rate") from various perspectives. The realized hourly rate is compared against the number of hours spent to properly benchmark Projects. This way, you can compare Projects and assess whether they were profitable.

A Project with a gross margin of €1,000 compared to one with €10,000 does not automatically mean one performs better—it depends on the size of the Project.

Note: This article is primarily intended for evaluating fixed-price agreements on completed Projects. So be sure to set your filters to closed Projects and fixed-price Services.


Calculation
The average realized hourly rate is based on the invoiced value from hours—costs are excluded. The formula is:

(Invoiced – sales value of the costs) / Total hours spent (excluding corrections)

Costs are excluded because they do not originate from your own hours and therefore do not reflect the hourly rate you’re aiming to realize and optimize. Corrections are also excluded, as the focus is on what is actually invoiced compared to the hours invested—so all actual hours spent are included.


Example:
Suppose you spend 100 hours at €100/hour. That creates an hour-based sales value of €10,000.

If you agreed with the Relation to invoice afterward, but some hours turn out to be non-billable due to a mistake or a negative client reaction, you may write off hours. If you write off 20 hours, you end up invoicing only €8,000, resulting in a realized hourly rate of €80/hour.

The same applies if you did the same amount of hours but agreed on a fixed price of €8,000.


The report focuses on closed Projects, as only then is the Project fully complete. On the Project’s end date, you’ll gain insight into what the realized rate was—for example, for Projects closed in February.

Advice: Determine the rate your company needs to realize in order to remain financially healthy. Consider factors like productive hours, personnel costs, overhead, and desired profit.

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