Canonical formula calculator
EFFECTIVE HOURLY RATE
What every hour you actually worked translated to in revenue — the number that exposes whether your business pays you fairly.
Worked example
How the number is worked out
A wedding photographer counting the editing, not just the shoot.
Starting from
Working
Forty dollars an hour, before a single cost comes out. A day rate that reads as $1,200 becomes this once the unbilled hours around it are counted, which is usually where the surprise lives.
What this tells you
Effective hourly rate is what you actually earn per hour of work, regardless of what you charge clients or whether you bill by the hour at all. It exposes whether your business is paying you fairly. A consultant charging $250 an hour who works 60 hours to deliver every $5K project has an effective hourly rate of $83, not $250.
When to use it
Calculate this quarterly. Compare it to what you would make at a job with similar skills. If your effective hourly rate is below your alternative wage, you have a structural problem in how you scope work, price work, or both. Service businesses get away with poor effective hourly rates because nobody calculates them; once you do, the choices become clear.
What it doesn’t tell you
Effective hourly rate does not account for the upside of running your own business — flexibility, equity in what you build, the ability to compound knowledge across clients. A lower effective hourly rate today might be the right trade for assets you are building. But you cannot make that decision unless you know the number.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.