Agency Hourly Rate Calculator
Sets the hourly rate and charge rate your agency needs to hit your target income at a sane profit margin. Inputs are overhead, utilisation and the income you want to take home. Free, includes industry benchmarks from HubSpot and Sortlist.
Agency Hourly Rate Calculator
The minimum hourly rate your agency needs to charge, based on your real numbers.
Your minimum billable rate
$136.55/ hour
Charge less than this and you're losing money on every hour.
Recommended rate (15% comfort margin)
$157.04/ hour
Buffer for scope creep, unbilled minutes, and bad-debt risk.
Your rate is only defensible if your hours data backs it up.
Ascend tracks time against the project record, so when a client questions the rate, the underlying hours are one click away. Free plan included.
Breakdown
- Target income
- $120,000
- + Overhead (30%)
- $36,000
- + Target profit (15%)
- $27,529
- = Revenue per person
- $183,529
- ÷ Billable hours/year
- 1,344 hrs
- Break-even rate
- $116.07/hr
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Sources: industry benchmarks from AgencyAnalytics 2025 Pricing Benchmark and Sortlist Agency Operations Survey 2024.
How this calculator works
Most agency owners set their hourly rate by looking at what competitors charge. That is the wrong direction. Your hourly rate should be set by what your P&L actually requires to support the income you want to take home, the overhead the business runs at, and the profit margin you need to reinvest or save.
This calculator does the math in the right order. It takes your target annual income, adds your overhead (rent, software, marketing, non-billable staff), and then targets a profit margin on top of that combined cost base. It divides the resulting total by the billable hours one person can realistically deliver in a year, which is where utilisation matters: nobody bills 40 hours a week every week of the year.
The number it gives you is the floor. Charge less than that and you are losing money on every hour. The recommended rate adds a 15% comfort margin to cover scope creep, unbilled minutes, and the occasional bad-debt write-off.
If you want to look at the same math from the other direction — solving the markup multiplier you need on direct labour cost — the overhead and profit calculator uses the same overhead-and-profit formula but expresses the result as a multiplier rather than an hourly rate.
You can also sense-check the resulting rate against project margins with the project profitability calculator, which works from the other end — what margin a project actually delivered after costs.
Hourly rate, charge rate, bill rate — what's the difference?
These three terms get used interchangeably, but they mean different things in an agency P&L. Getting them straight matters because pricing decisions made against the wrong one quietly erode margin.
Hourly rate is the simplest: the price per hour you charge a client for a person's time. If you bill $150/hr, that is your hourly rate.
Charge rate is the same number viewed from the agency's pricing logic. It is the hourly rate you have set after factoring in overhead, target margin and utilisation. The calculator above outputs your charge rate — the floor below which you lose money on every hour you bill.
Bill rate is a staffing-industry term, mostly used when agencies place contractors. It is the rate billed to the end client, which usually includes a markup over the contractor's pay rate. Bill rate is what you would care about if you are running a staffing or labour-broker model, not a project-based agency.
For a typical project-based agency, hourly rate and charge rate are the same number — what matters is making sure you have set it using the right math, which is what this calculator does.
Worked example — what the math looks like for a real solo consultant
Say you're a solo design consultant in the US. You want a take-home income of $80,000. Your business overhead — software, marketing, coworking, accounting, insurance — runs about $20,000 a year, which is 25% of your target take-home. You want to target a 20% profit margin on top of that, so there's a cushion for tax, slow months, and a retirement contribution.
For billable hours, you assume 28 a week — an honest number for a solo operator after admin, business development, and recovery time. Across 46 working weeks (allowing 6 weeks for holidays, sick days, and the inevitable lost-week emergencies), that's 1,288 billable hours a year.
The calculator runs that through the overhead-and-profit formula:
- Total revenue you need = $80,000 × 1.25 ÷ 0.80 = $125,000
- Required hourly rate = $125,000 ÷ 1,288 = $97/hour
- Break-even rate (no profit at all) = $100,000 ÷ 1,288 = $78/hour
- Recommended rate (+15% comfort margin for scope creep) = $97 × 1.15 ≈ $112/hour
If you're currently billing $85 an hour and feeling like the business is "fine but not growing," this is why. You're between break-even and required — covering your costs, but with no margin to invest, save, or absorb a bad quarter.
Which input moves the rate the most?
Most agency owners assume overhead is the swing factor. It isn't. Utilisation is. Holding the other inputs constant from the example above:
- Drop billable hours from 28 to 24 per week → required rate jumps from $97 to $113/hour (+16%).
- Raise overhead from 25% to 35% → required rate rises to $105/hour (+8%).
- Raise profit target from 20% to 25% → required rate rises to $104/hour (+7%).
A 4-hour-per-week swing in utilisation moves your required rate more than a 10-point swing in overhead. This is also why the most common under-charging mistake is assuming 40 billable hours a week × 50 weeks = 2,000 hours a year. Almost nobody actually delivers that. The real number for client-facing staff is closer to 1,300, and using the wrong denominator silently halves the rate the calculator gives back.
Run the tool above with your real numbers — particularly an honest billable-hours figure — and compare the output to what you're charging today. The gap, if there is one, is the rate increase you need at your next renewal.
Frequently asked questions
How does the agency hourly rate calculator work?+
It solves for the minimum billable hourly rate your agency needs to charge based on your target income, overhead percentage, target profit margin, and billable hours per year. It treats profit as a percentage of total revenue, which is how agency P&Ls actually work, so the math is iterative: profit and revenue are solved together rather than profit being added at the end.
What hourly rate should a small marketing agency charge?+
There is no single answer. It depends on your overhead, utilisation, target income and profit margin. Reported median small-agency billable rates in the US for 2024 sit around $125 per hour, but spread is wide across region, specialism, and seniority. Use the calculator above with your real numbers rather than copying a benchmark.
What is a good billable utilisation rate for an agency?+
Industry targets are typically 70 to 75% of total work hours billable for client-facing staff, according to the Sortlist Agency Operations Survey 2024. Higher utilisation looks good in theory but leaves no margin for admin, business development or recovery from project over-runs.
Should I include overhead in my hourly rate calculation?+
Yes. Overhead is everything that is not direct billable salary: rent, software, marketing, accounting, non-billable team members. If you do not include it in your rate calculation, you are effectively absorbing it from profit, which means your rate is too low. Small agencies usually run 25 to 40% overhead as a percentage of revenue.
How often should an agency raise its hourly rate?+
AgencyAnalytics Pricing Survey 2024 found 73% of agency owners raised rates less often than every 18 months, and most regretted not raising sooner. A practical rhythm is every 12 months for new clients and every 18 to 24 months for existing clients, with the latter framed as an annual scope review rather than a confrontational price increase.
What is the difference between an agency's hourly rate and its charge rate?+
For a typical project-based agency they are the same number, just viewed from different angles. The hourly rate is what is on the invoice. The charge rate is the same number once you have justified it from the inside — target income plus overhead plus margin, divided by realistic billable hours. The calculator above outputs the charge rate, which is the rate you should be invoicing.
What is a typical agency charge rate for a small studio in 2026?+
There is no universal answer. Reported median small-agency rates in the US for 2024 sit around $125 per hour, but spread is huge across specialism, region and seniority — design and dev studios often charge less, paid-media and strategy specialists often more. The right answer for your studio comes from your own overhead and target income, which is what this calculator solves for. Use it with your real numbers rather than copying a benchmark.
Read the full guide · 8-min read
How to set your agency's hourly rate (and why most agencies under-charge)
The four reasons agencies under-charge, the utilisation trap, and what to do this week.
Track time against the project to defend your rate.
Ascend lets you track time against the project record and build invoices from those hours when it's time to bill. When a client questions your rate, the underlying data is one click away.
Track hours to defend my rate