Charge-Out Rate Calculator
From salary and overhead to the hourly rate that actually covers the practice.
A charge-out rate has three layers: what the person costs per productive hour, the overhead each hour must carry, and the margin the practice needs. Enter the figures and the calculator shows all three, so you can see where a rate that feels high is really just break-even.
Cost per productive hour, plus overhead per productive hour, plus margin. Quoting below the second layer loses money on every hour.
Calculator
Change any figure and the result updates. Nothing is stored or sent anywhere. Defaults are illustrative.
The person
The practice
Charge-out rate
- Employment cost
- £56,640
- Available hours
- 1,613 h
- Productive (billable) hours
- 1,209 h
- Cost rate
- £47/h
- Overhead per productive hour
- £29/h
- Break-even rate
- £76/h
- Margin 20%
- £19/h
- Multiplier on salary cost
- 2.02x
Round the result to your rate card and review it every year when salaries and overhead change.
Results exclude VAT. Figures are rounded to the nearest pound or hour.
How the rate is built
Cost per productive hour, then overhead per productive hour, then margin.
The four steps
- Employment cost: salary plus on-costs such as employer National Insurance and pension.
- Productive hours: contracted hours less leave, bank holidays, sickness and training, multiplied by the share of time expected to be billable.
- Overhead per hour: the practice's annual overhead divided by the productive hours of all fee-earners.
- Margin: the break-even rate divided by one minus the target margin, so the margin is a share of the rate, not a markup on cost.
The defaults are illustrative. Use your own payroll, overhead and timesheet data. For the reasoning behind each step see setting charge-out rates.
Markup is not margin
A 20% markup on cost gives a smaller profit than a 20% margin on price.
If the break-even rate is £60, a 20% markup gives £72 and a 20% margin gives £75. The difference compounds across every hour the practice sells. Decide which one your rate card means and use it consistently in fee proposals, see calculating fees.
Questions practices ask
Short answers to the questions behind this calculator.
How do you calculate an architect's charge-out rate?
Divide employment cost by productive hours to get the cost rate, add the practice overhead per productive hour to get break-even, then divide by one minus the target margin.
What multiplier do architecture practices use on salary?
It varies with overhead and billable share. The calculator shows yours; a multiplier that looks high is often a sign of low utilisation rather than high margin.
Should the rate include VAT?
No. Rates are quoted excluding VAT, which VAT-registered practices add at the standard rate on invoices.
How often should rates be reviewed?
Annually at least, and whenever salaries, overhead or the billable share change materially. Rates fixed in an appointment should carry an indexation clause.
Where Avoice fits
Avoice holds cost rates and charge-out rates per person, so timesheets value every hour at both, project margin is visible by stage, and the rates you set here feed straight into deal pricing and invoicing..
To see it on your own projects, book a demo.