How we calculate

Break-even hourly rate = period costs / billable hours. Target margin is a share of selling price; VAT is excluded. Service price = service cost / (1 − target margin in percent / 100). A 20% margin divides cost by 0.8 rather than multiplying it by 1.2.

Worked example

These illustrative inputs let you check the method. They are not figures for a real company or automatically current tax rates.

Inputs

Costs for the period

4,000

Billable hours

120

Target profit margin (%)

20

Hours per service

2

Results

Service price

83.3333

Hourly selling price

41.6667

Break-even hourly rate

33.3333

Change assumptions in the calculator and compare outcomes. Money follows your input unit; figures from different periods need adjustment before comparison.

Assumption: period costs include the owner’s target pay; the target margin is added on top. VAT is excluded.